Auckland faces 200pc rate rises in next decade

Auckland City rates are set to soar over the next decade, taking the cost of council services up to $70 a week for the average household and more than $100 for the better off.

The average rates bill of $1200 a year would triple to $3600 under one scenario being presented by finance officers in a report to councillors this week. High-value property rates would soar from $1800 to $5400.

The report said current funding sources just covered the $2.4 billion of committed capital projects over the next decade, mostly on renewing existing assets. There was no money for $3.7 billion of new works such as the $350 million tank farm waterfront development, a revised eastern highway, a raft of small transport projects and footpath upgrades.

Officers have said if Aucklanders want the city to be up there with the best they will have to dig deep to pay for world-class facilities and services. That means rate increases of between 55 per cent and 200 per cent over the next 10 years.

Finance general manager Andrew McKenzie told the Herald: "The reality of the matter is if you want to do things, it costs you money."

Last night Mayor Dick Hubbard said it would be difficult asking ratepayers to pay a lot more, particularly after the council increased rates by 9.7 per cent this year on the basis that next year's increase would be "substantially less".

Officers had presented a number of options but ultimately councillors would decide which projects to do and the cost to ratepayers.

Mr Hubbard said there was a growing realisation that Auckland, with added pressures from immigration, could not finance all of its infrastructure out of rates. Internal Affairs and Local Government NZ were looking at the limitations of rates and at other funding formulas.

Mr Hubbard and finance committee chairman Vern Walsh said the pressure on Auckland City ratepayers reinforced the need for wider funding of regional facilities such as the zoo, art gallery, maritime museum and Philharmonia orchestra.

The officers' report, to be considered by councillors on Thursday, found few savings to go towards $3.7 billion of new works, of which ratepayers are up for $1.9 billion.

The rest would be funded by central and regional government and other sources.

Officers have recommended using an $18.7 million Auckland Airport share dividend and a $30 million strategic asset fund for new projects.

Another option is to squeeze the council's water business, Metrowater, for higher dividends. That would lead to water bills rising in real terms by 1.5 per cent a year over 10 years.

But these options would still require "significant additional funding" through borrowings.

The report listed six priority-ranked scenarios, costing from $600 million to the full $3.7 billion. The cheapest would lead to a 55 per cent rates increase. Funding everything would lead to a 196 per cent rise.

The city is debt-free after the previous council sold assets such as pensioner housing and half its airport shares.

The report said it was important for councillors to understand that the rates rises would stay in place for 30 years while the debt was repaid. Rates would rise in real terms for 10 years and remain constant for the next 20.