Target Operating Model

Adjusting Our Sails

Hutt City Council’s Target Operating Model

19 February 2026

Hutt City Council has released a report titled Adjusting Our Sails. This sets out a new target operating model and responds to dealing with the unprecedented change facing local government.

The report outlines a programme to reduce Council’s costs to be able to respond to rates capping and cost of living challenges for the years ahead. Adjusting Our Sails highlights the bold choices Council must grapple with to reduce costs and improve affordability for ratepayers, having exhausted opportunities through years of cost trimming.

If the Government’s proposed rate cap of around 4% is to be met, Council needs to save approximately $24M annually by 2034.  The report shows that savings of this scale cannot be made without fundamental changes to the services Council provides and the assets it owns. This is in an environment where cost increases affecting the economy flow onto councils driving up the price of key infrastructure and roading.

Any changes will be subject to Council decision-making processes, and engagement with communities and staff.

Key insights from the report include:

  • Council has made savings of $55M in recent years as part of the long term plan and annual plan processes, representing the conclusion of easier “cost-trimming” opportunities
  • The current annual budget is driven by: $30M in annual financing costs, $106M in annual depreciation charges, $56M in employee costs and $176M million in supplier costs
  • Hutt City Council has fewer staff and spends less than comparative councils on both a per/household and per/resident basis
  • Compared to similar sized councils, Lower Hutt is over-served for both pools and library/hub facilities.

The report highlights Council's strengths to build on, including recent IT/digital investments, significant infrastructure investment, and sector leadership on AI adoption.

Hear directly from Mayor Ken about what this means for our city:

Video description: Mayor Ken explains the Target Operating Model

Why this work is needed

Councils across Aotearoa New Zealand are facing:

  • Rising operating costs
  • Cost-of-living pressures on households
  • Significant Government reform, including Resource Management Act reform, possible amalgamations, rates capping and Simplifying Local Government.

Our community has been clear: future rates increases must be carefully managed.

A council starting from strength

While the financial challenge is significant, Hutt City Council is well positioned to respond.

Since 2019 we have:

  • Modernised systems and strengthened financial discipline
  • Improved community engagement
  • Invested in digital capability and become a national leader in AI adoption
  • Led the region in water services renewals
  • Secured major co-investment for city-shaping projects such as Te Ngaengae Pool, Tupua Horo Nuku and Te Wai Takamori o Te Awa Kairangi (Riverlink)
  • Maintained essential services through significant disruption and reform

What the report does

The Target Operating Model report:

  • Sets out the case for change
  • Identifies preferred options for future systems, tools and processes
  • Proposes future workstreams and initiatives
  • Presents a recommended approach to support informed discussion

It delivers on Council’s commitment to undertake a line-by-line review of budgets and spending.

It provides a foundation for a structured programme of change over time.

What the report does not do

  • It does not confirm or lock in decisions.
  • It does not immediately change services.
  • It does not remove the need for public consultation.

Any changes will be subject to:

  • Council decision-making processes
  • Community engagement
  • Engagement with staff

What happens next

  • The report will be considered by Council on 27 February 2026.
  • It will inform Council’s work over the coming months and years
  • Council will engage through the Annual Plan and Long Term Plan processes over the next 12 months

There will be opportunities for residents, businesses, staff and stakeholders to have their say.

Read the report

You can read the full Adjusting Our Sails – Target Operating Model Report below or a two-page summary here.