Wellington City Council is set to amend its Long-Term Plan (LTP) following the decision not to proceed with selling its shares in Wellington Airport.
The council is now examining alternatives to manage rising insurance risks linked to earthquakes and climate change, while also addressing a potential $2.6 billion funding gap for future disaster recovery.
Wellington Mayor Tory Whanau outlined the next steps for the LTP amendment, with a draft expected by year-end.
Key meetings in November will focus on insurance risk management and possible capital expenditure reductions, with final decisions slated for late November.
“Making savings is a difficult process, and we also discussed the principles that we should take to inform that,” Whanau said.
The council’s approach includes reducing debt-funded infrastructure and community projects, which may be scaled back in the revised plan.
Whanau stressed that while scaling back community initiatives is challenging, the council would seek to distribute the impact fairly across the city’s wards.
“As a top priority, I think every councillor agrees that the LTP amendment decisions should not further increase rates and should not reduce funding for water,” she said.
She reaffirmed the council’s commitment to protecting funding for social housing and key climate action projects.
“The focus is on reducing new infrastructure and community building projects as these are debt-funded,” Whanau said. “I have also laid out that as I steer us through this process, I will seek to avoid cuts to our provision of social housing and critical climate action.”
The updated LTP will address Wellington’s increasing insurance exposure due to natural disasters.
In a recent council session, chief financial officer Andrea Reeves highlighted the financial risks posed by a major earthquake, noting that a significant event could leave the council with a substantial reconstruction funding gap.
She indicated that around half of the council’s investment portfolio is tied to its stake in Wellington Airport, which is valued at approximately $278 million. This concentration of investment heightens financial risk, especially in the event of a disaster.
The council is looking to reduce its debt over the next decade and establish a $500 million disaster recovery reserve.
Discussions have also shown strong interest in setting up a self-insurance fund as part of the council’s broader financial strategy. However, the previously debated sale of Wellington Airport shares remains controversial, with some council members and the public expressing mixed views.
As part of its broader strategy, the council is reviewing additional funding sources to support long-term investments and reduce financial risks. These options include the sale of ground leases and carbon credit assets.
The council continues to engage with central government officials to explore these alternatives as it works to strengthen the city’s financial and insurance position.
