KEY POINTS:
Auckland City Mayor John Banks will be hard-pressed to find the cash he needs to address the major problems he isolated in his successful mayoral campaign, without access to New Money.
It won't be in Banks' script (yet) to sally up to the Labour Government and ask it to put a big wodge of its Budget surplus cash back into the nation's commercial capital.
But one of the first steps he should make is to urge the Government to make good on the recommendations of the rates inquiry team, which includes rating state-owned properties at a $100 million yearly cost to central government's coffers.
Finance Minister Michael Cullen might just find an investment approach which would have to be replicated across all of local government a quite appealing excuse to keep holding off on making personal tax cuts.
Other issues, such as rebating a significant portion of the goods and services tax take to local government appear unlikely under Cullen's reign.
Cullen has probably done more than most central government, politicians in the past few decades to address Auckland's problems. The regional fuels tax unveiled in his last Budget is a case in point.
But there's plenty more to do if Auckland is to gain the infrastructure to underpin its future success.
The retired mayor ousted cereal king Dick Hubbard by more than 11,000 votes yesterday after persuading Aucklanders he had transmogrified.
In policy statements on his website, Banks suggested it would take a lot to move him from the position he adopted in his previous term of keeping council rates increases to inflation.
This is a big ask when across the board rates in New Zealand have increased by 38 per cent in real terms (above inflation) in the 12 years preceding 2006/2007, with rates forecast to increase by 8 per cent yearly for the next few years.
In Auckland City rates have increased by 21.4 per cent overall over the past three years - a major factor in Hubbard's demise - and 32.7 per cent for households. A $1.5 billion council borrowing programme has dampened the funding demand. But with water rates having also increased by nearly 20 per cent, restraint is needed.
Banks' promises will be difficult to deliver in the longer term, judging by the results of the local government funding inquiry (aka the rates inquiry) led by David Shand.
The Shand Report identified affordability problems for rates for some sections of the community that will increase over the next 10 years.
This means that under current practices rates will not be sustainable in 10 years' time, warned Shand.
Rates currently account for about 56 per cent of local authority operating revenues, and the long-term council community plans (LTCCPs) forecast they will rise to 60 per cent by 2016.
Shand's three-person panel considered rates should still be the major source of local government revenue but it needed to be reduced to 50 per cent of council revenues. The panel said rates had many advantages as a funding source, pointing to efficiency, difficulty of evasion and low economic deadweight costs.
Auckland business lobbyists fed up with the length of time it has taken to address the city's infrastructural needs have also been making it clear to the Government that the local rates pool is not sufficient to fund all the projects that will underpin the region's economic and business success.
The lobbies agree with the Shand Report recommendation that central government pay rates to local councils on its own land and buildings.
But so far the Government is not biting.
Auckland could score a reasonable funding boost - expected to be at least $2m - if major land huggers, such as the University of Auckland, the AUT and other education institutions and hospitals, were rated. In central Wellington, where Government departments and ministries are fast expanding the state's footprint through a gold-plated building spree, the impact on local finances would be huge.
The Shand Report also recommends increasing the current local authority petroleum tax (the Government introduced a regional fuels tax in this year's Budget), making greater use of debt to finance long-life assets, using volumetric user charges for water and waste-water expenditures, and providing additional central government funding to a new infrastructure equalisation fund.
Business lobbyists have suggested that the GST on rates would also be returned to council coffers, with some going so far as to suggest that a portion of overall GST could go to regions rather than to Government. An increase in the departure tax at Auckland International Airport may well be on the cards.
Economic Development Minister Trevor Mallard ran into opposition from AIA when he proposed this as a measure to help fund his waterfront stadium proposal.
But the increased departure tax has since regained currency as one of the measures to fund a Destination Auckland drive.
Banks stood as an independent but his values are closely aligned with the Citizens and Ratepayers lobby that won 11 of 19 council seats.
This gives the new mayor the working majority that Hubbard lacked on council.
The C&R team also stood on a value for money platform and the lowest possible rates for Aucklanders.
Among other issues it wants more effective and efficient governance of Auckland, a value for money external evaluation of council activities and culture, rates increases being linked to the council's audited rate of inflation, with the caveat that there are no surprises on opening the books.
The C&R lobby also wants to have a higher uniform charge component to rates with less dependence on property values and the Government to bear some of the burden of the leaky homes scandal.
These are major issues that will pit a council dominated by centre-right politicians up against a centre-left Government.
Banks will need all the past mojo he can muster to deliver on these challenges plus tact.
