Wellington ratepayers facing increase of up to 15 per cent to cover pandemic cost and future projects
Thursday, 23 July 2020
Wellington is facing its biggest rates hike in more than 20 years as the city council looks to pass on the cost of Covid-19 to households and businesses.
City councillor Nicola Young said a rates rise of up to 15 per cent was being forecast for 2021-22, as the organisation looked to recoup lost revenue caused by the global pandemic and to fund future projects.
An increase of that size would be the largest for residential ratepayers since 1995-96, when a 16 per cent hike was imposed to amend the rates ratio between residential and commercial properties.
It also comes as soaring house values push up the average rates bill, with the median house price in the Wellington region passing $700,000 for the first time in February.
**READ MORE:
* Wellington City Council forecasting $55m in lost revenue from closed community facilities
* The Foster ultimatum: Choose a left-leaning deputy or else
* Wellington City Councillors to vote on axing free weekend parking
**
With rates increases kept to 5.1 per cent for 2020-21 despite the city council forecasting a $70 million financial hole because of Covid-19, the recovery cost now looks set to be passed on to future ratepayers.
Young said the signalled increase was unacceptable and showed the council was “not living in the real world”.
It had trimmed $7.4m from its 2020-21 budget, but would need to go much further next year, she said.
“When you have a drop in income, you have to look at your service levels.”
A few days ago, Auckland Council passed a 3.5 per cent rates increase in an emergency budget, and Christchurch City Council has also approved a 3.5 per cent increase.
Young said Wellington City Council needed to go through its budget with “a fine-tooth comb” to see where savings could be made, and there were some obvious targets.
One was the rates discount of up to $5000 for people building their first home or purchasing a new build in Wellington - a policy council officers recommended scrapping but councillors opted to retain.
Another was a $150,000 funding increase for household energy audits included in the council’s Tupu Toa: Build Back Better initiative, Young said.
“They are all small amounts, but they add up.”
The council had planned to generate an extra $11m from increases to fees and user charges in 2020-21, but later decided to freeze the fees because of the pandemic.
Wellington Mayor Andy Foster said he was not sure of the exact rates increase forecast for 2021-22, but it would definitely be higher than the 6.8 per cent increase projected in the council’s Long-Term Plan.
“I have said consistently for the last two years that figure excludes funding for Let’s Get Wellington Moving, and excludes money to do what we need to with Civic Square and the central library.
“It also excludes the operating cost of our three temporary libraries, any extra money needed for water infrastructure, and the $70m in foregone revenue because of Covid-19.”
The council had avoided cutting services in its 2020-21 Annual Plan, but that option would be revisited when it renewed its Long-Term Plan next year, he said.
A total of $324.6m was generated through rates in 2019-20.
That came from 72,838 residential and commercial ratepayers – an average of $4456 per property.
An increase of 15 per cent on those figures would push the average rates bill to $5124 – not accounting for population growth and the fact commercial rates are much higher than residential rates.
First Retail Group managing director Chris Wilkinson said the increase would be a big blow to property owners already struggling to attract and retain retailers.
“What we’re seeing is many of the big Australian retailers whose leases are coming up are increasingly looking towards a shared risk-and-reward model.
“So property owners are going to have to shoulder a lot more of the cost themselves.”