KEY POINTS:
Many of the poorest households in Auckland City will be hit with a rates rise of about 10 per cent just when economists are predicting the recession will be hurting hard.
Mayor John Banks and Citizens & Ratepayers are looking at changes to the rating system that will benefit wealthy neighbourhoods such as Remuera and Paritai Drive at the expense of residents in poor suburbs such as Glen Innes, Mt Roskill and Otahuhu.
"This is payback to the wealthy suburbs for voting C&R at the last election," City Vision councillor Glenda Fryer said yesterday.
Goldman Sachs JB Were's economic outlook is for the New Zealand recession to deepen and trough around the middle of next year when new rates demands hit letterboxes.
Mr Banks and C&R are committed to holding rates to 5 per cent, the council rate of inflation. But a decision by the council yesterday to increase the uniform annual charge from $162 to $350 means low-value properties will pay more than 5 per cent and high-value properties less.
Mr Banks was not present for the debate on increasing the charge, but earlier said it was expected 75,000 New Zealanders would lose their jobs over the next six months. Many job losses would occur in Auckland, with the most vulnerable group being middle-income workers, he said.
Council officers have not worked out the effect of the increased annual general charge. It is likely to extend to higher-than-average rates bills for many middle-income households.
Finance general manager Andrew McKenzie thought the increase for low-value properties would be in the order of 3 to 5 per cent above the average rates increase.
C&R councillor Aaron Bhatnagar said Auckland City was lagging behind other Auckland councils over annual general charges. Manukau City charged $334, North Shore $728 and Waitakere City $690, he said.
But Glenda Fryer said the figures were muddied by Auckland City charging commercial rates for water through its subsidiary, Metrowater.
The Government's rates inquiry last year found 55 per cent of Auckland City rating income came from general rates. The rest came from the uniform general charge, targeted rates and water charges.
Meanwhile, the council is pressing on with hundreds of millions of dollars in cuts to capital spending to hold rates to inflation in a new 10-year budget.
Mr Banks said the council would continue the maintenance on the "house of Auckland", but could not afford double-digit rates increases to pay for the big-spending proposals of the last council.
He said the council was still proceeding with $505 million of capital expenditure next year, a huge sum in difficult recessionary times. C&R's Paul Goldsmith said talk of slashing and burning was not backed by the facts. Huge layoffs were not occurring.
City Vision-Labour leader Richard Northey said the mantra of affordable progress might be affordable, but it was not progress. He was unsuccessful in passing a motion noting that holding rates to inflation for 10 years would require savage and unacceptable slashing of capital expenditure and create significant unemployment.
