Auckland Mayor Brown's budget may add extra rate increases. Prime Minister Chris Hipkins will lead a trade delegation in China, why skiers want "a greater say" on who’s running Mt Ruapehu and gang numbers rise in Ōpōtiki in the latest New Zealand Herald headlines. Video / NZ Herald
Auckland Mayor Wayne Brown’s controversial budget has a sting in the tail - a potential $700 rate rise over two years for the average household.
The pressure on household budgets could also be as much as $1000 when a 19 per cent rise in water bills over two years is added to the mix after a long-running period of high inflation and soaring household costs.
However, Brown’s office told the Herald last night the mayor’s focus will be on ensuring household rates are affordable and he has no intention of proposing double-digit increases on ratepayers.
On Friday, a majority of councillors voted for a 7.7 per cent rate rise for households as part of the first step by Brown to put the council’s finances on “a sustainable financial footing”.
Last week councillors voted for a 7.7 per cent rate rise. Photo / Michael Craig
But while the sale of airport shares dominated Brown’s first budget, next year’s challenges could be equally controversial with a scary outlook for rates.
Council finance officers have outlined the factors that could lead to a big rate rise next year to the Herald, but stressed the 13 per cent potential figure is “very preliminary” and there are a lot of factors to be worked through during the development of a new 10-year budget.
The 13 per cent figure is made up of:
* 3.5 per cent: Figure set in the 2021-2031 budget.
* 3.5 per cent: Increase to take into account high inflation.
* 4.25 per cent: To cover $85m of the ongoing budget hole that was temporarily covered by borrowings in this year’s budget.
* 1.75 per cent: Reinstating cuts this year to targeted rates and the plan to gradually reduce business rates.
Under this year’s rate rise of 7.7 per cent for households from July 1, the average household rates bill will increase from $3306 to $3560. A 13 per rise next week would take the bill to $4023.
The average household bill for water and wastewater is rising from $1224 to $1340 this year and earmarked to jump a further 9.5 per cent to $1468 next year.
At last week’s budget meeting, councillors debated the plusses and minuses of higher rates, higher debt and selling shares in Auckland Airport - trying to strike the right balance.
A statement from the mayor’s office yesterday said there is a projected operating budget shortfall for the 2024/25 financial year that, “if unmitigated by any other levers, will require an average residential rates increase in the range of 10-13 per cent”.
“However, the Mayor has no intention of proposing double-digit rates increases. A key focus of the Long-Term Plan will be on ensuring household rates are affordable by making Auckland Council run more efficiently and productively, as well as finding other revenue sources.”
Councillor Greg Sayers said Aucklanders and councillors would not wear a 13 per cent rate rise next year, saying he would expect Brown would look at other options, such as selling more assets, such as shares in the airport, and other council property (golf courses have been raised as another source of income) and taking on more debt, although Brown has been reluctant to increase borrowing.
Sayers said he also believed that former National cabinet minister Maurice Williamson, who chairs the expenditure control committee and is in charge of finding spending cuts at the council, would deliver big savings as part of the 10-year budget.
A group of eight councillors supported two proposals to increase debt above $100m set by Brown to avoid the sale of any Auckland Airport shares.
But this was voted down following advice from council group chief financial officer Peter Gudsell that debt should only be used sparingly to address the council’s $325 million budget hole and to do so would only require further cuts and even higher rates in future years.
Waitākere councillor Shane Henderson said it would be irresponsible to take on more debt when extra costs for the City Rail Link and stormwater work are in the pipeline.
Taking a significant step this year, he said, placed the council in a position of getting back to investing in things like a swimming pool at Massey.
The minority view of eight councillors said selling the shares was the easy, short-term option and a repeat of a failed strategy to sell the family silver.
Bernard Orsman is an Auckland-based reporter who has covered local government and transport since 1998. He joined the Herald in 1990 and worked in the parliamentary press gallery for six years.
