Bernard Hickey: In hole for millions

Ratepayers subsidise players at the Remuera Golf Club. Photo / Doug Sherring

Just imagine if someone told you the ratepayers of Auckland and the taxpayers of New Zealand were giving billions of dollars to the wealthiest property owners in the land.

How would the public react? Probably not well. Yet that is exactly the case and I haven't heard a chorus of talkback abuse or any outraged front pages or indignant questions in Parliament.

So here goes. Did you know that 1400 members of the Remuera Golf Club receive the exclusive benefit of a piece of Auckland Council-owned land valued at up to $517 million?

The club pays rates of $130,000 a year. If up to 70 per cent of that land was broken up and sold for housing and the rest left in parks, it would produce revenues of $16.5 million a year.

That's an annual subsidy of $16.37 million, or $11,700 a member. That includes Prime Minister John Key, who is an honorary member.

Even if each member played 50 rounds a year, that would be a subsidy of $233 per round or $13 a hole.

The estimates of the club's value and the forgone rates come from investment bankers and consultants Cameron Partners and EY in reports to the council, which is looking at ways to fund its looming infrastructure investment bill as Auckland grows.

"This represents a significant subsidisation to private interests and raises questions about whether at least parts of this asset could be considered for higher value uses," EY wrote in its report.

Cameron Partners estimated the value of Auckland Council's 13 golf courses at $2.1 billion, including Remuera, Chamberlain Park, Pupuke and Takapuna, which have a value of $1.4 billion.

This value assumed 70 per cent of the courses were redeveloped for housing and the remaining 30 per cent stayed as publicly available parks.

But the most startling statistic regularly touted this year has come from Finance Minister Bill English.

He regularly points out that 60 per cent of all landlords are subsidised by the Government, which spends around $2 billion a year on accommodation supplements and income-related rent subsidies to fewer than 30,000 landlords.

Auckland landlords will be the main recipients, thanks to Auckland rents being the highest in the land.

Imagine the outrage if these subsidies were paid to farmers or manufacturers or a religious sect.

Farmers are rightly proud of kicking the subsidy habit in the late 1980s, yet there are few howls of outrage about the subsidies for Auckland's property farmers.

The unfairness of these subsidies becomes more important in the context of Auckland's painful housing shortage, driven at least partly by the Nimby property owners of the leafy suburbs around the CBD.

The release last week of a report by the Salvation Army showing that dozens of children are sleeping in cars, garages, on couches and in caravans emphasised the point.

The Army called for urgent action to build thousands of affordable homes.

The Remuera subsidy is doubly painful. It is costing taxpayers and ratepayers forgone rates and higher taxes, and is also costing tens of thousands of Auckland's most-deprived children a chance of a stable home from which to learn, be healthy and eventually bring up their own happy, healthy and productive kids.

Ultimately, we all pay when a small group of the population benefits in the short term at the expense of the many.

Eventually, the extra housing, health and education costs will be paid for by taxpayers.

It is more than a pity these subsidies are not clearly identified and the tradeoffs measured. It's a tragedy and it means the Remuera subsidy costs three times over.

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