Wellington mayor Andy Foster. Photo / Mark Mitchell
Wellington mayor Andy Foster. Photo / Mark Mitchell
Wellington City Council is looking at a 9.1 per cent rates increase this year.
It comes on the back of interest rate hikes, inflation hitting a 30-year high, and a 13.5 per cent rates increase last year. The latest rates hike was revealed at an Annual Plan workshop yesterday.
While Mayor Andy Foster was sympathetic to the squeeze on budgets, he told the Herald that last year Wellingtonians were "absolutely emphatic" they wanted the council to invest in the city.
"That's exactly what we're doing. So, it's a really strong capex programme. Investing in things like the three waters, investing in the library and Te Ngākau Civic Square, in resilience, and transport."
Foster said the vast bulk of the rates increase was because of the depreciation and interest costs of the council's previous decisions to embark on a massive capital works programme.
"They are commitments which have been made, there's virtually no change in the operating budget at all. So, no new services the council's decided to splash out on."
The rates increase was actually originally projected to be 9.7 per cent, but thanks to internal cost savings and a previous decision to redistribute some of the council's capex budget to outer years, the starting point is now 9.1 per cent.
However, the council's chief financial officer Sara Hay said the projection did not take into account the fallout from Omicron.
"We know that there will be an impact from Omicron but we haven't quantified that yet. All we know is if we if we try and forecast it now, it will be wrong."
Infometrics senior economist Brad Olsen. Photo / Jess Wong
Infometrics senior economist Brad Olsen said it was a tricky balance and households had a lot on their plate.
He also agreed with Foster that it had been made abundantly clear that Wellingtonians want more investment in infrastructure.
"We know that building and construction costs have risen significantly, but we also know that the alternative for Wellington is having poo running down the streets."
"We've also got to think about the longer-term trade-offs. If we went for a lower number [rates increase] this year, we could well find ourselves in a position where 10 years on we have to pay even more rates to fix an even more broken system."
Olsen said these recent rates increases were about playing catch-up.
"The faster we catch up, the less the total hit will be."
