Auckland ratepayers will pay 5 percent more this year, and a cumulative increase of more than 40 percent over the next decade, as the council fixes the growing city’s assets and pays for new infrastructure.
How do you sell a 5 percent rates increase – and 7 percent initial increase in water charges – to a public facing uncertain household income, unaffordable housing, long commutes and grinding construction and congestion?
a) it’s not much, compared with double digit rises coming in Wellington, Tauranga and other ‘growth’ cities;
b) the rates take is no more as a percentage of the Auckland Council’s total revenue than the ’emergency budget’ last year, and only slightly more than the year before that;
c) it’s backed by ‘Team Auckland’ with 20 out of 21 local boards supporting it – Howick being the outlier – plus 46 percent support from people in a poll, and that’s more than most governments (or mayors) ever get when given the right to run the show. Thirty-seven percent were against.
d) public submissions on the 10-year budget, showing a near even split on the 5 percent rates rise, might not have been representative, thus the independent poll (above) to reach all demographics
e) it could’ve been worse if Covid-19 had left the council short by the predicted, full $1 billion this year, as opposed to the reality of just 3/4 of a billion dollars short as the economy rebounded
f) only tiny, non-growth councils like South Taranaki, Clutha and Tasman, have managed to slug their ratepayers with smaller increases (and their populations total about the size of the suburb of Manurewa)
g) the rises for the next nine years of the 10-year plan will only be at 3.5 percent (albeit water rises will be at 9.5 percent for six years)
h) selling $70m in council assets every year for the decade will keep the lid on higher rates
i) ratepayers paying up now means Auckland won’t have to max out its debt facility, keeping a buffer in case disaster hits again and more money is needed
j) Auckland needs to spend now to maintain its existing assets so it doesn’t end up like Wellington with pipes “exploding” in the street
k) The city must spend now on big new infrastructure plans (to be ready for ongoing population growth and higher housing builds), and…
l) the rate rise is only an average of $147 a year extra per household – slightly under $3 a week, less than a cup of coffee in some eyes, but as one councillor noted, pithily, the cost of one child’s school lunch.
There were endless justifications from the Mayor, Phil Goff, and his finance committee chair Desley Simpson as they guided their Long Term Plan budget finally through the committee on Tuesday.
They’d had a long time to come up with their thoughts and lines – groupings of councillors had had a total of 150 hours of private workshops on the budget proposed by Goff.
After the round of public consultation (devalued, possibly, by a large number of pro forma submissions stimulated by one ratepayers group), analysis from council officials, the Colmar Brunton poll to get a clearer (more favourable?) endorsement from the public and even the constant overview through those 150 hours by staff from the Office of the Auditor-General, the budget passed its vote.
The planned 5 percent rise first-up, followed by nine years of 3.5 percent increases would lift the average rates bill from $2810 to $4018, a jump of 43 percent over the decade.
The finance committee vote wasn’t unanimous, as four of the 20 councillors held out over concerns the 5 percent ask could be too high. That figure is an average, so some ratepayers’ increases will be higher and some a little lower than that.
Goff said the 5 percent increase, coupled with the plans to sell assets and extra borrowing to maintain assets and build infrastructure struck a good balance and was a “solid answer to the Covid crisis and a solid path forward”.
“We do not live in a dream world where these things can be done but somehow don’t have to be paid for.”
The council would have been doing more on climate change, had it not been for Covid-19. But the next annual plan, in 2022, “is the opportunity where we can top up our actions.
“Are we doing enough to stop the increase in global warming and put off catastrophic impacts for the environment, the economy and for agriculture? The answer is ‘No, we’re not doing enough… yet’.
“We need to take further, major steps next year and I believe the public will support us if we do that.”
But he and Simpson, with other councillors, sung the praises of a budget that would greatly increase the amount to be spent on infrastructure (up 50 percent from the last Long Term Plan in 2018) and would keep and upgrade community facilities.
“It’s going to be a very unknown road ahead of us,” the committee chair said. “We still need to continue our investment to ensure that we do recover. If we stop investment we will not be able to deal with infrastructure needs, not be able to deal with our ageing assets, not deal with growth.”
Goff repeatedly touted a total investment of $31.8 billion by the council into infrastructure, housing, the environment and transport over the 10-year period covered by the long-term budget.
While he was happy to round up the grand total over the decade as a selling point, he was not so keen on a calculation published Tuesday morning in the New Zealand Herald, that the ask on ratepayers would be a cumulative increase of 43 percent on current rates bills. Rounding up the water bills – which would be imposed by the council controlled Watercare – would result in more than a 100 percent rise in what households pay for water.
Goff said critics could make statistics paint any picture.
But “our priorities are retaining the key services, we’ve chosen not to slash our infrastructure spend”.
“We are likely to pick up 40 to 50 percent of the growth over the next 10 years for the entire country.”
The budget process has been exhaustive. The council had consulted its rating agencies over the move to raise its total debt capacity – known as its debt-to-revenue ratio – to 290 percent from the current 270 percent. Goff said the council planned to go to just 274 percent under this budget, because “we do not know what the future holds”.
Any increased debt still had to be serviced, and already the low interest rates of recent times had started to trend up.
There was much self-congratulation around the committee table as the matter came to an end. Goff and Simpson lauded ‘Team Auckland’ – perhaps better known as The Team of Five Percent – for the achievement.
Simpson praised the boss. “He listened to every comment from everyone around the table, the CCOs, the Independent Māori Statutory Board, local boards. He did it to reflect the views of Team Auckland. It’s not a left or right thing. You all know what side I sit on and what side the mayor sits on.”
But there were clear indications from the committee that some on Team Auckland believe the focus needs to shift off increasing rates, borrowing and selling assets to actually reducing what it costs to run the council longer term.
Councillor Wayne Walker said it was clear the new chief executive Jim Stabback and his team needed to look closely at “efficiencies over the next 10 years”.
Angela Dalton wanted a leaner council but for that process to be carefully weighed against the need for good health and safety policies for staff. “It’s a conversation we’ve got to have – that’s the opportunity for our organisation to become even leaner and smarter.”
Greg Sayers said the current budget’s “‘borrow, sell and rate’ model is not sustainable – and certainly not how it’s been used over the past decade”.
Simpson said no one denied the need to have “that conversation around core council business”.
But all of that is for another budget round, in another year.