Financial Strategy Financial Strategy Outline of Factors that are Expected to have a Significant Impact on the Long Term Plan Introduction 1. Environment Council must, under the Local Government Act 2002, manage its revenues, expenses, Marlborough provides a unique lifestyle opportunity for residents and visitors with assets, liabilities and general financial dealings prudently and in a manner that the full range of geological features from mountains to fertile plains, rivers and the sustainably promotes the current and future interests of the community. magnificent Marlborough Sounds, coupled with high sunshine hours and available The Financial Strategy is an important component of the Long Term Plan that water. These features support a wide range of business and leisure opportunities. demonstrates how Council will: Business opportunities have predominantly centred on “land and sea” based activities i.e. viticulture, forestry, horticulture, pastoral farming, aquaculture, tourism • Ensure that the levels of rates and borrowing are financially sustainable and kept and the servicing sectors. The common thread for almost all these activities is within pre-set limits. having a quality environment and maintaining it. Availability of quality water is also a key factor. • Maintain levels of service. • Maintain the assets it owns on behalf of the community. 2. Economy Provide for growth and changing demand patterns within the District. The major industries identified above rely upon favourable international markets to • provide a strong economic foundation for the District. • Fund improvements to infrastructural and other community facilities. Manage Council’s investments and liabilities. Infometrics estimate of GDP shows growth of 4.1% in the December 2017 year – • the fastest growth since 2006 and well above the NZ average. Indicators of consumer and business spending were particularly strong. Earthquake disruptions In preparing this Financial Strategy Council has considered how to balance: constrained visitor spending and traffic flows, but there should be a pick up now that SH1 south to Kaikoura has reopened. • The levels of service to be provided and the cost of achieving and maintaining them during periods of growth. Infometrics also advise that the outlook for the primary sector remains good. The priorities and timing of expenditure across all activities, especially expenditure Forestry prices enjoyed record highs for much of 2017, while seafood, sheep and • beef prices started 2018 on a healthy note. Deloitte’s annual wine benchmarking of a capital nature and the link to the Infrastructure Strategy. survey shows that winemaker returns over the past two years have been at their • The proposed levels of rates and charges across the full 10 year period of the Long highest level since the Global Financial Crisis (GFC) hit in 2008. Term Plan and their impact on the community. The proposed level of borrowing that current and future ratepayers will need to While the outlook is very positive, this should be tempered, with the largest • economy in the world imposing significant duties on some goods. The extent of service. retaliatory actions by other countries and the degree to which New Zealand will be Overall Council considers that it has successfully balanced these four key elements in impacted upon are as yet unknown. preparing the Long Term Plan, but welcomes the community’s input on how the current As it has in the past, the continuing impact of the GFC has the potential to impact result contained in this Long Term Plan can be improved. upon the cost of borrowing by New Zealand, the four major banks, Local Government Funding Agency (LGFA) and ultimately Council. Council in its interest Strategic Direction of Council rate assumption has taken a conservative position when compared with historically low current market rates. However, the Reserve Bank and other economic Council’s Mission Statement is set out on page 2 and Community Outcomes are set out commentators continue to forecast interest rate increases, it is just the timing that on page 22 of this Plan. Each Activity in this Long Term Plan identifies the outcomes varies. By adopting the approach that it has, Council is optimistic that it can avoid that it contributes to. future interest rate driven rates increases. 2018-2028 Long Term Plan Page 159