Michael Barnett: If Auckland's to be Super we need to look beyond rates

Fresh thinking needed to fund improvements, writes Michael Barnett. Photo / Dean Purcell

For decades rates have justifiably been a primary concern of Auckland politicians. It is laudable that Auckland Mayor Len Brown is showing early concern that he will encourage Auckland Council to limit rate increases to the annual inflation rate of around 2.6 per cent - that is how it should be.

But there is another side to our concern about rates that needs urgent attention - now we are a one-city region, what should we spend our rates on?

Do we need to give greater priority to finding new funding sources to pay for the services we all expect the council to provide, but will never be funded from rates if increases are held at sustainable levels?

Thinking Aucklanders agree that a core reason for unifying Auckland under a single council is to create economies of scale and new options to fund the many large catch-up infrastructure projects the region has talked about completing for decades. Like modern transport and water system improvements, attractive and well-designed urban developments on a par with cities such as Melbourne, Sydney and Brisbane. Also first-class recreation and sports fields and facilities and centres of excellence for hosting world-scale international conventions and events.

Funding many of these improvements is beyond the pockets of ratepayers alone.

Auckland has made a great effort to unite for the purpose of making a fresh start. We didn't elect a new council to have more of the same. If Auckland wants to lift its game maybe it is time we brought new thinking to how we go about fixing Auckland

If rate rises are to be limited to covering just the increase in inflation, maybe we need to have an urgent debate to agree on what services rates should fund?

The council will raise more than $1 billion in rates from about 490,000 Aucklanders. That leaves more than 710,000 Aucklanders, nearly 60 per cent of the 1.2 million population, plus between 1-2 million visitors to Auckland each year, getting a free ride on the backs of ratepayers. Is that fair? Can we sustain using ratepayers as cash cows for funding Auckland's long-term needs?

Statistics New Zealand data for 2008 shows that of the $1.1 billion raised in rates by Auckland's councils in 2008, around $680 million or 54 per cent was spent on transport. Do we really want that pattern to continue - over half our rates spent on transport and the cost of running Auckland being funded by just 40 per cent of citizens?

Maybe we should look at rates as providing the funding for the basic operational and administrative costs of the council running Auckland. If we did that I could accept the idea of ring fencing rate increases to inflation.

But we also need to keep open the option for the 21 local boards to identify projects that they want and agree can be funded by striking a local rate - as the Auckland legislation entitles them to do.

Rate top-ups through a system of consultation with ratepayer referendums is another option.

We also need to look at options that show Aucklanders' resourcefulness to not simply expect central government to stump up the money as the only alternative to rates.

Otherwise nothing new will get started, the Auckland-Wellington feuds will continue, and our dreams of addressing big aspirations such as CBD ideas will go nowhere.

We have a $30 billion asset base that creates exciting opportunities for Auckland to fund its dreams. Some of that asset base can earn a useful return that we could earmark for improving Auckland infrastructure.

There are many innovative funding tools that can be explored from public-private partnerships, which enabled the Vector Stadium, to selling property development options, like those used in some cities in which rail project stations are funded by commercial developers at no cost in return for establishing retail outlets whose customers are drawn from rail passengers.

If Auckland is going to make demands for central government funding for major projects, it needs to be careful to demonstrate the project will add value to New Zealand's economy, increase productivity and help boost employment.

We need to become a smart, inventive and creative "can do" city and not continue the tradition of holding out the begging bowl to Wellington.

And we need to be careful when talking about limiting rate increases to ensure we are not constraining the challenge and opportunity the new council creates to grasp these new funding ideas and action them with a sense of purpose and urgency.

* Michael Barnett is chief executive of the Auckland Chamber of Commerce.