Rolling maul over Hamilton rates rises settles on 16.5%

Thursday, 6 June 2024

A 16.5% rate rise has been set for Hamilton, with mixed views among councillors.

The ball has finally popped out of the rolling political maul over Hamilton’s proposed rates rise with 16.5% emblazoned on it.

That figure’s the final average rise for next financial year voted in during Thursday’s long term plan deliberations, and compares to a proposed 19.9% that went out for public consultation.

A rise of 16.5% means an extra $466 a year on current average rates of $2830 compared to $563 from a 19.9% rise - so it’s a “saving” of about $100 a year.

The figure was proposed by mayor Paula Southgate and was met with a counter proposal of 18.5% by economic development committee chairperson Ewan Wilson.

His suggested rise would have lifted average annual rates by $523 next year.

The draft 2024-34 long term plan was signed off on Thursday for formal adoption next month, but only after intense discussions in recent months.

But councillors voted 8-6 to go with Southgate’s lower suggestion.

Rates are now set to rise by 15.5%, 14.6%, 13.5% and 12.5% over the following four years.

Despite that trimming, there’s clearly plenty more rating pain on the way.

The council chamber saw wide-ranging debate over the finalising of the long term plan, with councillors spli 8-6 on two key votes on Thursday.

By year five of the long term plan under Southgate’s scheme rates are due to have risen by a whopping 97% or an extra $2745. Wilson’s scenario sees them compounding a notch lower at 96%.

At the core of the debate over whether Southgate’s or Wilson’s approach was best were the likes of debt levels, interest charges and whether enough was being done to slash costs, particularly through job and consultant cuts.

Southgate insisted “every rock and stone” had been turned over in the search for savings.

Mayor Paula Southgate described times as very tough for councils while chief executive Lance Vervoort (right) said the plan as the most challenging he’d dealt with.

“There’s no pet projects in this one.”

A 16.5% rate responded better to public concerns about high rate rises, with little difference between 18.5% and 19.9% hikes.

Councillor Ewan Wilson led the charge to get an 18.5% rates rise next year, saying it was more fiscally responsible than 16.5%.

But Wilson insisted his approach was more “fiscally responsible”.

“It addresses the issue of the debt headroom,” he said, referring to a debt to revenue ratio the council needs to maintain to remain financially healthy.

Councillor Andrew Bydder says the long term plan has failed the public.

Under his plan, balancing the books deficits would also be lower in the first two years and net debt tracked lower than Southgate’s scenario over the first eight years of the plan period.

However, some of the differences between the two scenarios were comparatively minor when viewed through a “big picture” lens.

Members of the two camps who voted for either Southgate’s scheme or Wilson’s way lined up to support them.

Councillors Tim Macindoe (left) and Geoff Taylor spoke in favour of Wilson’s suggested 18.5% rise.

“In my opinion we have failed the public,” said councillor Andrew Bydder, who voted with Wilson.

Councillor Tim Macindoe said: “We will be profoundly disappointing [ratepayers] today.

Councillor Sarah Thomson said 16.5% would still be a big shock for ratepayers, even if it was lower than other suggestions.

“Reluctantly I will go for higher this time to help drive down debt quicker.”

Maori ward councillor Moko Tauariki was worried about the impact of high reates rises on already economically challenged Māori constituents.

Councillor Geoff Taylor said: “This week we have missed golden opportunities to make the council a more fiscally sustainable operation.”

Going for 18.5% would give the most revenue up front to help immediately reduce interest costs, he said.

But, speaking in support of Southgate, finance committee chairperson Maxine van Oosten said the overwhelming feedback from ratepayers was that they couldn’t afford the likes of 19.9% rises.

“16.5% is a number that I’m a lot more comfortable with.”

It would still enable balancing the council’s books in year 3 of the plan and give the council debt “headroom”.

Councillor Sarah Thomson said the 16.5% jump was “still a big shock” but not as much as 19.9% or 18.5%.

“Interest rates if you’ve got a mortgage are just nasty at the moment.”

Māori ward councillor Moko Tauariki - who supported 16.5% - spoke of less affluent Māori who would suffer the consequences of any big rise: “They are going to face some economic challenges.”

Councillors also voted 8-6 to the full long term plan, due to be formally adopted early next month.

Councillor Louise Hutt suggested the signed off plan was “the long term plan of lesser evils”.

Ahead of that second vote, Southgate spoke of how councils around the country were facing major financial challenges and the generally difficult economic times.

“This is the most uncertain playing field I’ve ever played in.”

Wilson, who voted against the plan, was concerned the council was facing a tripling of its daily interest bill to $300,000 by the end of the plan period.

The council needed to do more to live within its means.

He was supported by Taylor who claimed: “This was a moment to make a change and the council hasn’t taken it.”

Macindoe said he’d had a call from a stressed out long-term Hamilton business owner.

“Our rates proposals are driving him and his business out of this city.

“His business will not be the only one.”

But councillor Louise Hutt, who supported for the plan, said: “This would be the long-term plan of lesser evils.”

Chief executive Lance Vervoort described the plan as the most challenging he’d ever dealt with.