Infrastructure Strategy • capital expenditure to increase levels of service, e.g. improve quality of drinking water supply, is funded by borrowing • renewals capital expenditure is funded from revenue - rates and charges - set to recover depreciation expense, and accumulated until spent. This funding source emphasises the importance to Council of continually fully funding depreciation on infrastructural assets. As we move beyond the Financial Strategy and into the later 15 years of this Infrastructure Strategy the focus of capital expenditure is forecast to move to renewals. In practice any funds available are used before new loans are drawn down, to avoid paying interest unnecessarily; excepting Development Contributions which are only ever used to fund growth projects. The resulting “inflated” budget is for total capital expenditure of $1.1 Billion and operating expenditure totalling $3.6 Billion. The inflated capital spending is: • 11% to service forecast growth • 17% to improve levels of service (strongly influenced by wastewater and also by water supply) • 72% to renew assets as they reach the end of their lives. Council’s Financial Strategy sets out the strategic financial direction; the external and internal factors expected to have a significant impact (in particular over the next ten years); and the approaches used to fund this scenario in a prudent manner. The strategy identifies that in general: • growth driven capital expenditure is funded by Development Contributions 2018-2028 Long Term Plan Page 221