Part C: Summary of our financial approach

Explaining our borrowing position

Significant new investment in our priority areas

This plan includes increases in borrowing over the first 10 years of our 30-year financial and infrastructure strategy. The key cost drivers for our increased borrowing are the significant upgrade programme for transport, and our resilience and economic growth.

Our borrowing position is conservativeTop

Our strong financial position means we can afford the projects outlined in this plan. Our approach is to keep borrowing levels within the 175 percent debt-to-income limit set out in our financial and infrastructure strategy.

We have far less debt (measured as debt-to-income) than most metropolitan local authorities. Our debt levels range from 120 percent to 167 percent of our annual income, which is below our limit of 175 percent.

Our starting borrowing position of $507 million equates to $2,400 per person in Wellington. This borrowing position will move to $1.16 billion by year 10 and will equate to $5,100 per person in Wellington.

Our forecast maximum ratio through the duration of Our 10-Year Plan 2018-28 is 167 percent and our limit is 175 percent. This level of borrowing still leaves approximately $157 million of borrowing capacity in 2028 for use, for example, in the event of a natural disaster.

2018-28 forecast 10-year borrowing ($m)

Graph: 2018-28 forecast 10-year borrowing ($bn)

Capacity for more borrowing if requiredTop

Should demand for additional asset investment occur in future plans, we expect the Council will have capacity to accommodate these within the limit. There is also sufficient balance sheet strength to amend the debt-to-income ratio limit to at least 200 percent without any anticipated effect on the credit rating. This level is still well below the allowance of up to 250 percent specified in our covenant with the Local Government Funding Agency (LGFA).