Rarked up on ‘record’ rates rise

Saturday, 9 December 2023

Hamilton is facing the biggest rates rise of any big city in the county for the coming financial year.

The 25.5% increase figure proposed bears more resemblance to a cricket score than the usual single digit council demand and has left the city’s mayor facing queries from “distressed and anxious” residents about how they’ll pay.

And if you thought you’d never seen it this bad during the worst of Hamilton’s many and varied financial storms, like the $27m V8 race hosting blow-out or the $68m Claudelands Events centre build stoush of more than a decade past - you’d be right.

If ultimately introduced, the rise would be the highest rate of increase recorded in the city for at least the last 30 years, according to council data.

It’s also throwing into sharp relief the divide between councillors resigned to the city taking its harsh economic medicine to keep services functioning and those still hoping to slash more from budgets to make the pill easier to swallow.

More than one city burgher doesn’t expect the rise to go through as is, once citizen pressure comes to bear, while others say the days of pushing debt down the road are long gone.

The 25.5% proposal, agreed 11-2 by councillors last week after a two-day 2024-34 long term plan hui, will have many worried at the financial impacts on households facing serious cost of living problems. The two voting against were mayor Paula Southgate and her deputy Angela O’Leary.

The council said previously 25.5% would add $13.90 a week ($722 a year) in 2024-25 for a median ratepayer. A median value Hamilton residential property is currently worth about $833,000.

Southgate, who proposed a lower but still stiff 18.6% rise, said feedback she’d had was that some ratepayers were “distressed and anxious” about 25.5%.

Others she’d spoken to were being “pragmatic” and saw the proposed rise as realistic for the council’s situation.

The Hamilton proposal appears to be significantly above what’s being mooted in some other bigger cities in percentage terms.

Auckland is to consult the public on an average 7.5% increase for residential ratepayers next year and Tauranga City Council’s long term plan summary suggests residential rises of from 5.7% and 7.8% next year under different classifications, with other levies adding 51 cents to $5.25 per property.

Christchurch City Council staff have suggested an overall 13.5% rates rise for next year, although the mayor and councillors are aiming for between 9% and 12%.

Wellington City Council could be facing an “unprecedented” 15%-20%.

Data on actual average rates increases in Hamilton since 1993-94 shows 9.7% in 2018-19 as the highest. An initial suggestion was 16.7% for that year.

The lowest increase over the 30 years was a mere 0.14% in 1993-94.

Councillor Ewan Wilson moved the 25.5% figure to help balance the council’s income-matching-spending books quicker, according to a formal government measure.

But he’d still like to see the increase below 20% “based on [spending] cuts”.

Councillor Geoff Taylor wasn’t expecting a 25.5% rise to go through after public consultation.

“I’m hoping residents will give a powerful message of what needs to be cut from the budget.”

He’d like the council to “stick to core spending”.

Finance and monitoring committee chairperson Maxine van Oosten said of the “huge” 25.5%: “I think it needs to be reduced.”

She felt the public didn’t see it as realistic but the figure was a good conversation starter about the council’s costs.

On using debt to offset operating deficits, she said: “We can’t use that strategy going forward…it’s just not sustainable.”

Councillor Anna Casey-Cox was open to a more graduated rise in rates next year if that’s what the community wants. “It’s a conversation that needs to be had thoughtfully by all of us.”

She was particularly concerned about stiff rises hurting low and middle income earners. But she’d agreed to 25.5% going out to consultation to help spark discussion.

People needed to let the council know if they were prepared to have service cuts to keep the rise down, Casey-Cox said.

However, councillor Sarah Thomson felt that “unfortunately there’s very little room for movement unless residents say we want cuts to essential service”.

Proposed percentage rise comparisons with other main centres could be misleading as Hamilton’s rate rises could start from a lower base, Thomson said.

Southgate, who initially floated a 16.3% rise before suggesting 18.6%, felt that even that first figure was going to be “extremely uncomfortable at this time” for ratepayers.

On whether she hoped the final rise could be reduced, she said it was important for public feedback to tell councillors what they did and didn’t want done.

“If I had a Christmas wish it would be to find a way to bring down rates [rises] next year for Hamiltonians while maintaining services.”

She felt the council currently had sufficient debt “headroom” to remain “well clear of our debt to revenue limit”.

Southgate also hoped for more government cash to meet infrastructure challenges. “There must be some Government help. We need a funded strategic partnership with central government.”

O’Leary felt the move to balance the books quicker wasn’t really needed at this stage. A bigger rise would hurt residents more at a difficult economic time.

She felt the budget was lean anyway and difficult to trim to reduce the rate of increase. “It would be very hard.”

She, too, wanted more help from Wellington: “Central government needs to fix how local government is funded.” Rates were a non longer fit for purpose archaic property tax.

Councillor Moko Tauariki, deputy chairperson of the finance and monitoring committee and a supporter of the 25.5% proposal, also felt cuts to bring the rate of increase would be tricky.

“I don’t think that can be whittled down to be fair.”

If he could change things “I’d probably go back in time, maybe 16 years, and re-priortise the rates spend to reflect a growing city”.

That would have helped avoid the need for so much growth-related spending now, Tauariki said.