Councils explain why rates bills keep rising

George Wood

Average rates bills are going through the roof - with promises of more increases for years to come. Today is the second of a three-part series investigating why our rates keep going up.

Auckland's four city councils say they are putting up rates to pay for multimillion-dollar projects and meet rising costs of construction, borrowing and Government regulations.

North Shore Mayor George Wood said his council intended to spend $1704 million on capital works in the next decade, which could mean average rates increases of about 8 per cent for each year to 2015-16.

The city's 10-year spending plan also included $567 million on transport capital works, including a series of park and ride stations along the Northern Busway and $255 million on waste water works.

He said the council was getting some criticism for spending so much on infrastructure, though it was still in "catch-up mode" after years of failure to address problems.

"But what about the environmental benefits?" he said.

"We have taken some bold decisions which are now paying dividends such as cleaner beaches and a sewerage system that does not overflow every time it rains."

Auckland City Council has a $2.2 billion list of projects for the next decade. It includes $100 million for international facilities such as Eden Park, which is to be expanded and improved for the 2011 Rugby World Cup.

Manukau City Council plans to spend $1.486 billion on works, including $22 million on the connection to the Waiouru Peninsula from the Southern Motorway.

Waitakere City Council, which is moving into a $38.5 million civic centre and council offices in Henderson, plans to spend $150 million on a balanced programme of road improvements, railway station upgrades, walkways and cycle-ways.

In addition to capital works, the councils' rate rises are to pay running costs - some caused by factors beyond their control.

Waitakere chief executive Harry O'Rourke said outside influences on rates ranged from fuel costs and interest rates to Government policies and regulations.

Government measures such as the Building Act and the Resource Management Act had given councils extra responsibilities in processing and monitoring, which added to the ratepayer burden.

"In the last four to five years we have kept our internal costs close to the level of inflation but things like worldwide price rises in oil, steel and cement have raised construction costs."

Mr O'Rourke said it was not uncommon in the past for councils to artificially keep rates low by not renewing infrastructure such as sewer pipes.

"Nowadays we build and maintain things to a higher standard so these costs don't hit ratepayers heavily in the future."

Borrowing for projects has also allowed councils to keep rates increases low and spread the cost among those who benefit by the works.

North Shore City Council finance director Dale Lott said a "main driver" of rates increases was interest on loans and repayment of debt.

The council's policy was to repay up to 20 per cent of its debt a year once it reached a certain level. By 2014 it would be repaying $70 million of debt in that year.

The interest bill for 2006-07 is $12.5 million, rising to $17.4 million in 2007-08.

Councils say a further factor in rates increases is providing for replacement of assets, such as water pipes, bus shelters and pensioner flats.

Auckland City said allowing for depreciation of assets took $100 million from the $390 million it would receive from rates.


Do you have a question about rates or the way your money is being spent? Email the Herald Newsdesk and we will put the best questions to councils and bring you their answers in our special report Rates on the rise.