Environment Southland expects challenging year

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SOUTHLAND’S regional council is expecting a $3.5 million drop in income in the coming financial year due to the impact of Covid-19 on tourism and income from investments.

Environment Southland (ES) chairman Nicol Horrell said a strong balance sheet and a reduction in spending means council was in a good position to weather the shock, but it would be challenging.

“The largest impact on the Council’s annual income is an expected drop of $2.8 million in marine fees from cruise ships visiting the Southland region, particularly Fiordland.”

A further drop in income of $700,000 was due to an expected reduction in the Council’s investment portfolio as a result of the Covid-19 economic downturn.

“Unfortunately, the drop in income is expected to result in a budget deficit this coming year, with the potential for ongoing deficits through to 2024. The extent of the deficit, however, and the ability of the council to return to a balanced budget by 2025 will depend on council tightly managing its expenditure and leveraging its balance sheet to best effect. Work is well under way to do both and this will be reflected in the detail of the annual plan when it’s finalised,” he said.

The ES balance sheet comprised assets in land and investments, which needed to be maintained at a reasonable level to ensure it could respond to future emergencies like the floods in the Waiau catchment in December 2019 and the Mataura catchment in February 2020.

Both flood events resulted in Council needing to draw on $2 million of its investment-based reserves to meet the immediate costs of the flood response and subsequent river engineering works not covered by insurance.

ES was working through its medium-term financial approach to ensure it could continue to effectively manage the region’s natural resources, in particular freshwater, and build on the community’s resilience to natural disasters, including maintaining the flood protection network.

ES aimed to adopt its annual plan and associated budget on June 30.

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