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What are our challenges and uncertainties?

This 10-Year Plan provides some unique challenges as we seek to balance affordability with the desire to make progress. On this page you can read about the things we believe matter most.

For more information about each of the major challenges discussed here, see our consultation document and our draft strategies and plans. You can find these in our document library.

Water reform

Currently drinking water, wastewater and urban stormwater are run by Councils. Under a three-year programme to reform local government three waters service delivery arrangements to improve outcomes, the government is proposing that water and wastewater are managed by a small number of multi-region entities (the approach to stormwater is yet to be determined). We have agreed to consider the proposal and, as a result, we have been granted $9.4 million of government funding to bring forward some critical renewals and advance key water and wastewater resilience projects.


The timing and design of these reforms is not clear, and as they are not yet at a stage where we can meaningfully consult with our community, we are developing the 10-Year Plan on the assumption we will continue to provide these services. But, the reforms mean there's a lot of uncertainty in our plan. What happens in this area will have a big impact on our renewals and maintenance programmes and the Nature Calls project (see following sections) as we may not be responsibile for these in the future.

Maintaining our assets and services

Councils across New Zealand are facing major challenges with their infrastructure as part of a national conversation, with high-profile examples of infrastructure failures in some other cities. We need to ensure our infrastructure is up to standard. We’ve made a big step up in our asset management planning and, as a result, we’re facing increased renewal costs, especially for roading, property, three waters and information management. We’ve been underinvesting in these assets. To address this we are increasing the investment in renewals and moving to a more proactive maintenance approach for critical plant and equipment. 

We have spread the cost of this catch up over three years. Taking this approach allows us to also invest in new things – for example, social housing, road safety improvements and walkways.

In the first year of the plan, we're proposing to spend an additional $5 million on maintenance and renewals and in year two a further $4.1 million (on top of the $5 million). That means around $100 added to yearly rates for the average household in year one and another $80 in year two. It will have no impact on our debt.

Risks and uncertainties

There are risks with this staged approach and, while we are catching up, assets could fail or need unexpected repairs. This could lead to outcomes like environmental damage from sewer pipe leaks, customer complaints about footpath maintenance, or temporary closure of facilities for repairs.

On the other hand, there is also the risk that we are replacing our assets too soon and while they are still in reasonable condition.

It is important to note that there are some gaps in our knowledge of our asset condition, particularly for our underground infrastructure. More information is in our Infrastructure Strategy [link]. This means we have based the increased investment in renewals and maintenance on the age of our assets and the relevant best practice for asset life, rather than specific knowledge of the asset condition. Hence we may have over – or under – budgeted the amount we need to invest in the long term.

Through this 10-Year Plan we are putting programmes in place to improve this knowledge, especially for our critical assets, and we will have a significantly better understanding for the next 10-Year Plan, and hence more accurate budgets. We are investing $500,000 to $700,000 a year in this better understanding ($10-$14 per year in average household rates), with no impact on debt.

Nature Calls 

Nature Calls is the biggest financial and environmental decision and investment our city faces. It is focused on determining the best practicable option for treating the city’s wastewater for up to the next 35-plus years. We have committed to identify a preferred option by June 2021 and submit a resource consent application for a new wastewater treatment plant by June 2022.

We have been working on this with Rangitāne and other regional iwi representatives since 2017 and have carried out significant engagement with key stakeholder discussions, as well as public engagement and extensive technical investigations. We started with 36 options and have narrowed this down to six broad options.

At this stage we have not identified a “preferred” option. However, several options consistently appear at the top of the rankings: river discharge with enhanced treatment, 50:50 split discharge to river and land (the land would be inland, not coastal), or ocean discharge.

Important criteria in deciding on the best option are ensuring public health, respecting Māori cultural values, valuing the natural environment, resilient infrastructure, prudent financial implications, supporting growth and economic development, respecting social and community considerations, and future proofing our approach through appropriate technology. The next major step in the process is further public engagement to seek feedback on the shortlisted options. This is happening alongside the 10-Year Plan consultation. We will consider the community feedback on Nature Calls and the 10-Year Plan together. 

Risks and uncertainties

We do not yet have a preferred Nature Calls option, so for the 10-Year Plan we have assumed an acceptable option could be delivered for $350 million (plus inflation) but it could be more or less than this. As our biggest project it has a major impact on our budgets and our plans.

If the preferred option costs more than $350 million we will first see what is happening with the three waters reform. If the Nature Calls project remains our responsibility, we'll explore funding options through the next 10-Year Plan or through a 10-Year Plan amendment.

Under current conditions and NZ Local Government Funding Agency rules we will not be able to borrow $350 million for Nature Calls. This means, without change, the 10-Year Plan is not financially sustainable in the longer term.

Given the amount of current uncertainty around the Nature Calls options and the potential change to come with water reforms, we will revisit this issue through the next 10-Year Plan when we will have more certainty about the water reforms and Nature Calls.


The virus has changed the way we live and has greatly affected some people's livelihoods. We recognise the hardship it has brought and adopted a Covid-19 Annual Budget in 2020-21, with a rate increase of 1.95%, down from 4.4% in the proposed Annual Budget. We made this decision on the information we had at the time. However, Palmerston North has emerged in a better position than we imagined, far better than most other cities. This reduction puts pressure on our current budgets, meaning the catch-up budgets we mentioned above are even more important right now.

The Covid-19 lockdown also showed us what’s important: caring neighbourhoods, a sense of working together, local walkways and cycleways, Civil Defence for those who need help, supporting local businesses and jobs. All of these involve lots of people and organisations working together, including Council. As outlined above, our proposed 10-Year Plan has a lot about investing in our infrastructure. We are also investing in a sense of community and looking after each other.

We fund economic development through the CEDA, the Central Economic Development Agency. CEDA supported the business sector through Covid-19. We will continue to support economic development and are currently renewing our three-year contract with CEDA for this.


There are lots of uncertainties about Covid-19, but in the proposed plan we have assumed that there will be no further nationwide lockdowns. However, we are updating our business continuity plans to ensure that we can continue to provide our services to the fullest extent possible under Covid-19, or any other emergency. Also, if necessary, we can modify our priorities through future 10-Year Plans and Annual Budgets to meet emergencies.

Climate change

Climate change is increasing the frequency of extreme weather events, including more frequent heavy downpours.

In response we are altering the way we manage and develop our infrastructure. We need to lower the city’s and Council’s carbon footprints so we are focusing on infrastructure that encourages residents to make low-carbon choices (particularly for transport), make more use of trees and natural systems, and improve the energy efficiency of our networks.

We are also mitigating the impact of climate change on our infrastructure and services. The biggest impact here is on stormwater. Heavy downpours can overwhelm the stormwater system and lead to stormwater entering the wastewater network. This increases wastewater treatment load and costs. We have programmes in place to reduce this infiltration.

We are also developing more natural ways of holding stormwater – for example, wetlands, rain gardens, and domestic water tanks. And many of these natural stormwater improvements add to our biodiversity and Green Corridors networks. For more information see our Infrastructure Strategy and our Climate Change Plan.

Earthquake-prone buildings

Council owns nine earthquake-prone buildings, which by law (and for public safety reasons) have to be strengthened or demolished within 15 years. We propose to strengthen them with estimated costs of $150 million spread over the 15 years: Crematorium ($0.5M), Wastewater Treatment Plant ($2M), Civic Administration Building ($10M), Square Edge ($10M), Regent Theatre ($15M), Central Library ($60.5M), Te Manawa ($51M), Caccia Birch ($2.6M), Keith Street Power Station ($0.5M). This is capital expenditure funded through debt and every $1M adds $1.50 to average household rates per year.

We acknowledge that demolition of these buildings is a legal option. If there is community support for demolition, we would need to consider it on a building by building basis to see if it is prudent and practical. Many are heritage buildings and there are still demolition costs and, in some cases, replacement costs that would need to be considered.


The projects will be spread over 15 years, with the Crematorium, Wastewater Treatment Plant and Civic Administration Building planned for the first three years. The budget and timing of individual projects could change through future 10-Year Plans as we get more detailed information on each of the buildings. In particular, the Central Library and Te Manawa upgrades which are being considered in the wider context of how Council can revitalise the city centre. This will be achieved through the Civic and Cultural Precinct Masterplan, which will be drafted in mid-2022. We will consult with you more then.

Sustainable growth

Palmerston North is projected to grow significantly over the next 10 years. Housing affordability is declining and we need to ensure housing supply matches demand. Major infrastructure projects and private development (such as Te Ahu a Tūranga: Manawatū-Tararua Highway, KiwiRail Regional Freight Hub, Defence Force at Ohakea and Linton, and the Mercury windfarm) will continue to drive this growth and place more pressure on housing affordability and infrastructure. We are planning our infrastructure to meet this demand for growth and to help address the housing affordability problem.

We are doing this by ensuring that enough land is appropriately zoned and has the necessary infrastructure to meet demand (without being too early, in which case we face unnecessary holding costs of having the infrastructure in place but not used, or too late, in which case we would be constraining growth and pushing up housing costs).

We are also trying to meet housing demand by providing a range of subdivisions – mostly (50%) greenfield (opening up new subdivisions), 38% infill and brownfield (taking advantage of available land in the city), and 12% rural developments. Within this we are also looking for a greater range of housing types, such as medium density and city centre living.

We have growth costs of $217 million in the 10-Year Plan but these are ultimately met by developers and landowners through development contributions.

Achieving our capital programme

Over the next 10 years the Manawatū has a significant pipeline of government, residential and commercial infrastructure investment. This is great for growth and investment in Palmerston North, but it also means that existing consulting and contractor resources will be stretched, putting upward pressure on prices and possibly extending delivery times. This means there is a risk to our ability to deliver on the capital projects proposed in the 10-Year Plan. The total value of our capital programme over the next 10 years is $1.484 billion.

In order to reduce this risk we are bundling separate projects into larger packages of work to give contractors more certainty about continued work, and starting contract negotiations earlier to let them accommodate our projects within their forward commitments.

However, we will still need to continually review industry capability to deliver our capital projects. This could mean that some projects may need to be pushed back a year or two, either through Annual Budgets or future 10-Year Plans.

Several projects in this proposed plan are heavily dependent on external fundraising. Many roading projects are 51 per cent funded by Waka Kotahi New Zealand Transport Agency. Based on past agreements we are reasonably confident about this funding, although we may need to review the extent and timing of some individual projects if they are not funded.

Waka Kotahi has indicated an agreement to fund the Palmerston North Integrated Transport Initiative (regional ring-road). In total this would cost over $100 million, with 75 per cent from Waka Kotahi.

We also have a proposal to build a new grandstand at Central Energy Trust Arena. This would cover the embankment opposite the current grandstand. It would increase the seating at the Arena, provide a better spectator experience, and make it more likely we could attract bigger events, such as tier three rugby games. Its total cost would be $13.5 million. We are budgeting for $9 million of this coming from external fundraising. We will borrow the remaining $4.5 million. We would reconsider the project through a future 10-Year Plan if these external funds cannot be raised.

The budgets and timing of all the projects in the proposed 10-Year Plan are based on our best information at this point. They will be reviewed through future 10-Year Plans and Annual Budgets. New information at that time could mean we change the cost or timing of individual projects. Our consultation document contains details of key projects. Doing all the capital projects adds to Council’s debt. Debt is a way of sharing the costs of these projects across the current and future generations who will benefit from the projects.