The Christchurch City Council is grappling with a 20% increase in insurance premiums, translating to a $6.4 million surge for the 2024/2025 fiscal year.
According to Interest.co.nz, the increase in insurance costs is catalysing a proposed substantial hike in average rates by 13.24%, aimed at offsetting the steep rise in operational costs attributed to insurance, alongside inflation and higher interest rates.
The rate adjustment is a pivotal part of the council's strategy, as revealed during the public engagement phase of its draft Long Term Plan (LTP) for the years 2024 to 2034.
Highlighting the insurance cost spike in the draft LTP, the council points to the escalating construction costs and the expanding risk landscape within New Zealand's insurance market as primary drivers.
Christchurch Mayor Phil Mauger has voiced concerns over the economic pressures this proposed rate increase could impose on residents and businesses.
“This Draft Long Term Plan proposes an average rates increase of 13.24%. I am well aware that rates rises have a big impact on your back pocket. It's a familiar story at this point, but as you prepare your submission, there are a lot of factors such as interest costs, insurance premiums, and inflation, that we have little ability to control,” he said, as reported by Interest.co.nz.
Adding to the council's fiscal challenges are the effects of inflation, anticipated to contribute an additional $23.8 million to operational costs for the year 2024/25, and a rise in interest expenses totalling $14.8 million due to increased borrowing rates. Projected new net borrowing has escalated to $2.6 billion over the forthcoming decade, exceeding prior forecasts.
Amid these financial dilemmas, the council is prioritising climate resilience. Within its draft LTP, it has proposed establishing a Climate Resilience Fund aimed at bolstering adaptation efforts. This measure seeks to alleviate the future economic impacts of climate change on subsequent generations.
The establishment of the fund is anticipated to significantly bolster the council's capacity for climate adaptation, with potential funding reaching up to $127 million throughout the LTP period.
The council invites feedback on the draft LTP from March 18 through April 21, offering residents a chance to weigh in on these critical financial and environmental planning efforts.
