Auckland mayoral race: Tamihere would freeze rates and cut salaries

Monday, 26 August 2019

Auckland's mayor is rubbishing John Tamihere's plan to freeze rates rises for three years.

Aucklanders are being promised a rates freeze by mayoral challenger John Tamihere in a policy that would slash $260 million from council revenue over three years.

Tamihere's policy, if implemented, would have a big impact on the planned level of investment by Auckland Council, and also on its ability to borrow to deliver major projects.

It would deprive the council of revenue it has pencilled into long-term budgets, from projected rate rises of 3.5 per cent a year.

The rates policy is short on detail, other than a claim that an additional 1 per cent spend cut across the council and its agencies would balance out the lower revenue.

**READ MORE:

John Tamihere has announced his transport policy in his run for the Auckland mayoralty. (Video first published in August 2019)

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

'Most Auckland householders know that if they had to, they could save 1 per cent of their expenditure annually. It's as simple as that,' said Tamihere.

Meet the Candidate: John Tamihere.

Tamihere pointed to the number of council and agency executives earning more than $200,000 a year as one area for cuts.

'I wonder whether we are getting good value from our senior managers and administrators,' he said.

A freeze on the scale proposed by Tamihere would be unprecedented in Auckland local government, and have impacts not explained in the two-page policy document released to Stuff after midnight Sunday.

Rate revenue makes up 45 per cent of the income that flows into Auckland Council coffers each year, and dictates not only its running costs, but also how much it can borrow to fund major long-term infrastructure.

In next year's budget, the first in which a Tamihere rates freeze could take effect, the council plans to borrow an additional $712 million to fund capital works - whether that would still be possible is not made clear.

A further $1 billion of extra debt is planned for the following two years.

While Tamihere describes making a one per cent saving across the council group as 'simple', that ignores other parts of the budget equation.

Auckland Council already plans to find $62 million in efficiency gains over three years, and Tamihere's proposed savings would have to be achieved on top of that.

Tamihere also suggested another offset to lower rates could come from his plan to sell-off the council-owned port company while retaining the land it occupies.

However that would require council approval, a law change, and be subject to public consultation - a process that would take years even if successful.

Tamihere suggested landlords could pass on the benefit of his proposed rate freeze, by freezing rents.

Phil Goff rubbished Tamihere's rates policy as 'incoherent' and 'lacking in basic financial understanding'.

'Where is the money going to come from to pay for the work that we desperately need to do in Auckland, like transport and housing infrastructures,' said Goff in a statement.

'These sorts of promises are fundamentally reckless, dishonest and unbelievable.'

John Tamihere wants to freeze Aucklanders' rates for three years.

Last week Tamihere pledged to scrap the regional fuel tax, in a proposal that divided experts as it would cut a forecast $4.8 billion from council transport funding.

Goff said the Tamihere plan would deprive the council of $3.8 billion in rates revenue - but it was not clear how he arrived at that figure.

Last month, Tamihere said he would part-privatise Watercare, a move that Goff said would increase household water bills by $200 to $300 a year, or a 12 per cent increase in average general rates.

Auckland Council finances are already under pressure as the city faces major infrastructure spending to cope with growth, and under-investment over past decades.

Officials are trying to find $500 million in savings to fund the $1 billion increase in the cost of the underground rail project, the City Rail Link, which it is building jointly with the government.

The council may also have to pick up a bigger share in some years, of the $28 billion transport project package, the Auckland Transport Alignment Project.

The government is struggling to fund its share of the package and the council has suggested it pick up a bigger load in some years, and a smaller load in others.

Tamihere's own transport policy released last week includes significant unfunded projects such as a replacement harbour bridge, scrapping light rail, and building new commuter rail lines, which he said would be paid for by the government.

The release of Tamihere's policy in the wee small hours of Monday morning, has prevented independent expert analysis of what is a complicated equation.

Tamihere added a note to media, and directing them the council's Finance committee chair and deputy, Ross Clow and Desley Simpson, as to whether the plans were achievable.

Stuff has tried unsucessfully to contact Tamihere's running mate, former Auckland City mayor, and Albert-Eden-Roskill ward councillor Christine Fletcher, who is travelling overseas.

Tamihere will face Phil Goff, Craig Lord and Jannaha Henry at Stuff's Auckland mayoral debate on September 2, when a live audience will quiz the election frontrunners.