Castalia, the independent research group who produced a report showing Wellington City Council face a $1 billion funding gap as reported yesterday has claimed the council has misinterpreted the data, based on its response to the media on the findings.

The research group, which carried out the review of National's tax plan, was called upon by three prominent Wellington locals to evaluate the council's spending commitments.

The results of the analysis, reported by the Herald yesterday, found at least $500 million in council spending that’s not included in the most recent 2021 Long-Term Plan, and a further $500m in unbudgeted spending.

When this analysis was brought to the council, it hit back stating the claims were based on old figures and the basis behind some costs is unclear.

Council chief financial officer Andrea Reeves said Castalia's analysis made assumptions based on information from 2021 at a time when the council hasn’t yet made decisions about what projects it will and won’t pursue over the next 10 years.

“For example, the submission provides an estimated cost for spending on the Michael Fowler Centre and Opera House earthquake-strengthening, bringing water infrastructure up to standard, major transport projects and community housing investment,” Reeves said.

“The basis behind these costs is not clear from the submission provided. Further, it provides another $500 million on other expenditures without making it clear what this relates to.”

Now, Castalia has defended its research process and methodology. 

In a statement to Newstalk ZB Plus, managing director Andreas Heuser stated the council "seems to have misinterpreted the Castalia analysis contained in our clients’ submission to its Rating Review"

He said the submission contained an itemised list of expenditures with up-to-date public information which totalled more than $1 billion. 

"The key assumptions for the analysis are contained in our clients’ submission," he said. 

Heuser also clarified the submission "specifically excludes" the Michael Fowler Centre strengthening costs.

He said in preparing the estimates of additional costs on the other expenditure, including elements like earthquake strengthening and community housing, Castalia used the best available public information from a range of sources.

This included the council's Long Term Plan 2021, the 2022 update to the plan, the council's Financial and Infrastructure strategy, Department of Internal Affairs consultants and inflation estimates.

"Forecasting future costs is inherently uncertain and depends on reliable information sources, balanced assumptions and robust analytical methods," said Heuser.

"We welcome any clarifications on the specific cost estimates that [the council] can make."

Digital entrepreneur, Luke Pierson - one of the three Wellingtonians who invested in Castalia's analysis - said the fact Castalia had to use old old numbers summed up the problem. 

"The council has not been transparent and the mayor is prohibiting her councillors from speaking publicly about the state of the city’s finances and we just don’t know, so we went and found out ourselves," said Pierson. 

"We’d love to be shown that we’re wrong, that would be a great outcome from this, but there’s nothing publicly available that suggests that we’re wrong at present."

Mayor Tory Whanau said the council is following a Long-Term Plan process and wanted to hear the views of the community at the appropriate time.

She said council officials were providing open and honest advice to elected members to help them with Long-Term Plan deliberations.