Wellington’s rates officially ‘unaffordable’

Tuesday, 19 November 2024

Judy Rohloff is calling for a rates revolt, saying she is not intending to pay any increases until the council puts a halt to its 'irresponsible spending'.

Homeowners relying solely on superannuation for income are struggling to afford rate increases which are now officially “unaffordable”.

And, according to an affordability metric in the Wellington City Council’s long term plan, they will remain “unaffordable,” for the next four years.

Since 2014, the Government has required councils to make a statement which involves setting limits on how much they can increase rates, and reveals whether a council is prudently managing its revenues, expenses, assets, liabilities and general financial dealings.

Wellington’s 2023 to 2024 increase of 12.3% was the first over the affordability benchmark since 2014.

This year, the council increased rates by 16.9%, plus another 1.6% to pay for the sludge treatment plant. For some, the increase was more than 21%, due to a jump in Greater Wellington Regional Council rates.

Grey Power, an advocacy organisation for people over the age of 50, said it had members in central Wellington living “hand to mouth”. as they struggled to keep up with the increases.

In 2022 the Retirement Commission found that 40% of people aged 65 and over were relying on NZ Superannuation as their sole source of income.

In 2024 the basic weekly rate for a single person living alone was $607 ‒ before tax ‒ and $923 for a couple.

Wellington central Grey Power president Colleen Singleton said members she had spoken to were all concerned about how they were going to pay the increases and maintain their lifestyle.

Singleton said some people were struggling to buy food, were turning to op shops for clothes and were not able to buy their grandchildren Christmas presents.

Soon, she said, older people would be forced out of their homes and central Wellington.

Karori resident Judy Rohloff, 71, who started the Wellington Rates Revolt Facebook page, is living on superannuation and a little bit of savings.

She and her husband have refused to pay this year’s rates increase, which was over 21% ‒ instead continuing to pay last year’s rate.

While Rohloff could afford the increase, she said she was doing it for all the people who couldn’t.

Sham Pancha, of Brooklyn, is refusing to pay the increased component of her rates bill.

She and her husband had started to dip into their KiwiSaver savings and said there would come a time when they would be relying solely on superannuation.

James Ross of the Taxpayers' Union, which is setting up the Wellington Ratepayers' Alliance, questioned how people would keep a roof over their family’s head when rates would be three times as much in 10 years from last years rate’s increase.

“You only have to walk around to see that people are struggling,” he said.

Ross said he had been contacted by people who were ”getting desperate and looking for any help”.

“The only answer to that is serious, systematic change at council because we can't wave a magic wand and make people's rates bills disappear.”

Martin Hawes, independent director of Lifetime Retirement Income, said people were easily spending half of their pension on rates, insurance and house maintenance.

Hawes said options such as downsizing and reverse mortgages or home reversion schemes could be used to deal with inflating costs.

Lifetime Retirement Income’s home reversion plan allowed homeowners to sell part of their property to a plan provider in exchange for a tax-free lump sum or regular payments.

Managing director Ralph Stewart said the scheme was set up about three months ago with a “strong response” in Wellington.

“Given the population differences Wellington is arguably well over represented compared to Auckland.”

The council is currently holding meetings to amend its long-term plan, and mayor Tory Whanau has promised rates will not be increased.

Councillor Ben McNulty said in order to dramatically change rates, the council would need to substantially cut back services like community facilities, libraries and pools, as well as increasing user charges and parking fees.

With big capital projects like the Golden Mile, strengthening the Town Hall and Zero Waste already in train, McNulty said any cuts would not immediately feed into rates savings, as costs were often apportioned often decades.

“The amount of debt or interest that you're paying each year of a 100- year project life isn't gigantic.”

Councillor Nicola Young said taking action would mean going right back to the basics, and putting everything up for potential cuts, apart from water.

In her view, it would be an empty city if the council did not.

“Wealthy people can always afford the rates but they can also afford to move. It's people who are less well off who are really affected by these huge increases.”