Auckland rate rises: If 2.5 per cent is the answer, what is the question?

Monday, 18 February 2019

Might Auckland's proposed 2.5 per cent rate rise put the political cart before the horse?

When it comes to local body rates, the lower the better, right ?

In Auckland's case that's a moot point as the city heads for another seemingly carved-in-stone 2.5 per cent average increase.

It is not a scientifically arrived at figure, it is not the answer to the question 'What must be done in Auckland', and it risks being little more than a political trophy.

'2.5' entered the Auckland political lexicon in 2016, when it became Phil Goff's promise as he sought the mayoralty.

* Auckland Mayor Phil Goff attacks under-investment, unveils 'deliver it' budget

* Auckland Council signs off 10-year budget, as fuel tax continues to worry some councillors

* Auckland Council approve Goff's $26 billion budget**

It looked responsible, and as part of an argument about all the things needing to be done in Auckland, more realistic than the centre-right's pledge of 2 per cent.

So it was that for two years, and likely three, average general rates have risen by no more than 2.5 per cent.

It is a promise that expires on election day in October, and already next year's rate rise is pencilled in at 3.5 per cent.

It has not really been 2.5 though. Last year 'targeted rates' specifically for programmes of environmental improvement and accelerating water quality work, added 4.6 per cent to average rates.

Branded as targeted rates, and passing the consultation test, they will haul in an extra $76 million a year, leaving politicians able to honour the general 2.5 per cent promise.

Coincidentally, for an average-value home the removal of the flat $114 Interim Transport Levy, was an almost identical saving - allowing the political argument that everything balanced out.

But that ignores the 11.5 cent-a-litre regional fuel tax, which one economist calculates will cost the average household $252 a year more, more than double what is saved in losing the levy.

This year there are no new targeted rates, no lucrative fuel tax, and 2.5 per cent will be just that, on top of everything that's gone before.

The 'pure' 2.5 per cent will come at a time when there are signs of increasing budget pressure - things that maybe should be done if affordable

Auckland Transport has not revealed the full story of its rising cost pressures, but the iceberg has a few visible tips.

The agency wanted to freeze public transport fares, to shift more commuters out of cars.

AT argued it had already absorbed $10-15 million of higher, unbudgeted public transport costs, and the $3.7m needed to freeze fares had to come from its funders.

Neither the Auckland Council nor NZTA jumped at the chance - the council already chasing 'efficiency savings' from inside its own budget.

A long-haggled-over plan to revamp ferry services and buy new boats has gone back to the drawing board when AT found it would cost twice what was expected.

Will the council's requirement to pay-off Eden Park's $40m loan come with other obligations to the cash-strapped stadium?

Will the construction of the America's Cup village uncover unexpected and costly nasties on top of the recent budget hike?

Public consultation begins this week on the proposed annual budget, but nowhere are Aucklanders invited to consider whether more than 2.5 per cent is warranted, or what it would deliver.

The document reads more like a chance to endorse the council's existing plans - or in its words: 'Allowing us to deliver our ambitious programmes, while keeping rates lower than any other metropolitan growth city in NZ.'

In this age of Budgets being given names, Goff's 2019 one is 'Deliver It'.

What won't it deliver at 2.5 per cent ? Maybe the question should precede the answer.