Auckland Council 'emergency budget': Household rates up, business rates down

Auckland Council is planning big cuts in the emergency budget and putting forward two options for rates. Photo / File

Auckland Council's "emergency budget" is a mixed bag on the rates front.

Household rates will be more than the two options in the budget for an overall increase of 3.5 per cent and 2.5 per cent, and business rates will be less.

That's good news for businesses struggling in the economic aftermath of the Covid-19 lockdown and bad news for household budgets.

In dollar terms, the average household rates bill across the most populated part of the Super City will rise by about $130 under the 3.5 per cent option and about $105 under the 2.5 per cent option.

In other parts of the city, the household rises will be about $110 and $85 under the two options.

The changes would take the average household rates bill to between about $2800 and $2950, depending on what option is taken and different parts of the city. On top of this, the average household water bill is set to rise by 2.5 per cent in July, from $972 to $996.

The reasons for different rates between households and businesses, and different parts of the city, are due to rising waste management costs and lowering rates for business.

A virtual ban by China on taking recyclables, causing a collapse in prices, has driven up costs in providing waste management services, charged separately to general rates. In the former Auckland City and Manukau areas, moving from a fixed charge to charging by volume has meant a bigger rise to households than other areas.

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The other factor affecting household rates is a long-term plan to gradually lower the rates burden on businesses matched with a gradual increase in residential rates.

The net result of these factors means the average household rates bill will rise by 4.45 per cent or 3.57 per cent respectively under the 3.5 per cent and 2.5 per cent options in the old Auckland City and Manukau City areas.

For the rest of Auckland, the respective household rates rises will be 4.3 per cent and 3.4 per cent respectively.

The 3.5 per cent rates rise equates to $59 million and $42m for a 2.5 per cent increase. Officers have said the lower a rates increase would have to be "caught up" the following year or risk altering service levels and investments in the long-term.

The "emergency budget" is the response to a $525m revenue hit from the Covid-19 pandemic - the highest faced by any council and the highest in the city's history.

To plug the gaping hole, it includes dramatic cuts to spending on infrastructure and reducing popular services such as libraries and community centres. Public transport and road safety are other victims of the pandemic.

Library services could be reduced under the emergency budget. Photo / Brett Phibbs.

Going from a 3.5 per cent to a 2.5 per cent rates rise was like going from hard to very hard and a zero rates increase would have been severe, says senior finance officer Ross Tucker.

His boss, chief finance officer Kevin Ramsay, goes further, saying a zero rates increase or near that would jeopardise budgets for years to come with higher debt, a possible credit rating downgrade and higher interest costs.

The council's consultation document on the budget said it could not responsibly propose rates increases below 2.5 per cent. Even at 2.5 per cent, public toilets will be closed, street cleaning standards will drop and charges could be introduced at park and ride stations.

Ramsay said a 3.5 per cent rates rise includes cuts to service and less spending on infrastructure, including $200m on transport and reduced hours on council facilities. Think libraries, swimming pools and community centres.

Everything is compounded yet again with a 2.5 per cent rates rise with $18m less to run council services and $60m to $70m less to spend on projects.

None of this washes with the Auckland Ratepayers Alliance, which has launched a campaign with billboards and 80,000 pamphlets with an option for a zero rates increase.

"A zero rates option is absolutely achievable," says spokeswoman Jo Holmes, saying councillors must wrestle control of the process and sacrifice nice-to-haves just like businesses and households have done."

Auckland Chamber of Commerce chief executive Michael Barnett supports the lowering of the business differential, but disappointed ratepayers were not given the option of a zero rates increase.

He believes council should treat the Covid-19 emergency as an opportunity to do something different, saying the budget is focused on protecting the interests of council rather than ratepayers.

The Green Party has joined calls to hold the line on rate increases and adopt creative thinking, with local government spokeswoman Chloe Swarbrick calling the proposed cuts regressive for communities and dangerous for the climate.

Auckland Council finance chairwoman Desley Simpson. Photo / Jason Oxenham

Finance committee chairwoman Desley Simpson said council has done its very best to provide Aucklanders with rating options in the budget.

"It is important to note that a 3.5 per cent rates rise post-Covid won't deliver the same as it would've before this crisis due to substantial revenue loss.

"At 3.5 per cent there will be delays to projects. At 2.5 per cent we start to get into really difficult decisions that will impact our service levels. No matter where we land, there will be trade-offs," said Simpson.

More than 20,000 submissions have been received on the emergency budget. Public consultation closes on Friday.

For details, go to: www.aucklandcouncil.govt.nz