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How can Auckland Supercity reduce residential rates?

Written By: - Date published: 8:00 am, July 17th, 2015 - 36 comments
Categories: auckland supercity, local government, public transport, sustainability, transport - Tags:

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Reprinted from Futurewest’s blogsite.

Details of Auckland Council’s new rates bills have been released this week. No doubt many are wondering why the super city is not working out in the way that was promised …

There is this belief that left wingers and progressives prefer to increase rates and taxes and right wingers prefer to decrease them. In my personal view the belief is simplistic and frankly wrong. But it is time for progressives to start challenging this belief and to set out how Auckland City can be run more fairly, more sustainably and more cheaply.

One of the reason this belief exists is because of time frames that different parts of the political spectrum respect. I personally am all in favour of expenditure that may be expensive in the short term but save money in the long term.

A classic example of this is the inner city rail link. If Sir Dove Myer Robinson’s aims for light rail back in the 1970s had been put into place then Auckland’s form would have been significantly different. Instead of being a motorway clogged car friendly but person unfriendly behemoth it could have been something approaching the world’s most liveable city.  The inner city rail link potentially has a similar transformational long term beneficial effect although it will cost in the short term.

Forward looking leaders will spend money now on infrastructure that will be needed in the future so that it is in place when the need arises. If we do not start building the inner city rail link now then Britomart will soon clog up and the full potential of Auckland’s rail system will be delayed by years. We need to prepare for this event now.

The right tend to look at these projects and see only costs without measuring the greater benefits. It is easy to make a balance sheet look good short term by putting off important expenditure but long term the downside is always more expensive and the remediation costs more extreme.

Having said that I believe that it is possible for residents to have lower rates to pay and for Auckland to be a better place to live in.

How do we achieve this?

There are two recent decisions made by the Council that I disagree with which will raise residents’ rates bills.

Firstly I believe the transport levy is completely unfair even though the funds are necessary. This is because it is a flat levy imposed on all ratepayers. Businesses pay a slightly larger amount ($182.85) than residents ($113.85). Given they can claim back the GST and that the payment reduces their tax liability the net amounts are likely to be generally the same. This means that Sky City as well as a retired resident of Piha will pay the same amount even though Sky City’s draw on the transport system is of a number of degrees magnitude greater than the Piha resident’s. And the payment is per residence or per business. I anticipate that a business with multiple properties would pay one levy. This is completely unfair. A fairer way in my opinion would be for the levy to be removed and for the necessary funds to be raised by a general rates increase.

Secondly Auckland Council has programmed into its rates policy a decreasing proportion of total rates being paid by businesses. This is despite the business draw on infrastructure being significantly greater than residents. It also has the appearance of a zero sum gain in that your average SME owner who also pays residential rates will save on the one hand but pay more on the other. Of course for corporates like Sky City and businesses owned by overseas interests there is no such problem and its shareholders are laughing all the way to the figurative bank.

The other beneficiary of a decrease in business rates is the Government.  As profitability rises so will the amount of taxation payable.  All in all the proposal makes sense for non Auckland residential rates payers but no one else.

And there is no evidence that the decrease in business rates will have a beneficial effect or is necessary.  Auckland’s problem is that it is growing too quickly and that businesses are coming to the area, not leaving.

Another area where I believe significant change can be made is to simplify Council processes. Things are too complex, forms too long and outcomes too unpredictable. There has to be a better way.

In relation to salaries I believe that rates for senior management are too high. I struggle to understand why anyone should be paid more than the mayor ($260,000 approximately) although I note there are a number of senior managers being paid well in excess of this.  In 2014 there 141 Auckland Council employees earning over $200,000 and 35 earning over $300,000.

At the same time I believe the Council can put a stake in the ground and become aliving wage employer, at least as far as its direct employees are concerned. This will require a modest increase in rates but if we are determined to make Auckland a liveable city for all then it is the first thing we should do.  The increase was estimated to cost $2.5 million in 2013 which would very roughly be 0.1% of the amount of the revenue that Auckland Council collects.

If we are going to make rates more affordable then we will have to seriously address transport spending.  Transport is one of Auckland Council’s biggest spend.  I believe that not every current transport project on Auckland Transport’s books are necessarily deserving of our support.

What are the projects that we should be reviewing? I believe the inner city rail link is vital as it will double the potential capacity of the rail link and will make the average train trip faster and more predictable. But there are many others where an alternative approach would result in significant savings.

The general approach to dealing with transport demand is to feed the supply side, mainly by building more roads. We need to consider suppressing the demand side and there are many things we can do to achieve this. For instance current technology is such that a great deal of work can be done outside of the office. imagine if one day each fortnight 25% of the workforce worked from home using cellphones and laptops and video conferencing.

And besides car usage in Auckland has plateaued. You have to question the need for further roads.

Generation Zero have come up with a compelling proposal that would save $220 million per annum by spending predominately on public transport and walking and cycling projects and slowing down  many of the road projects that are programmed in Auckland’s Regional Land Transport Plan.

The other benefit is that the quickest way to degrade an urban area is to make it easier for cars to use.  And the best way to improve quality of life is by creating more people friendly rather than car friendly places.

So we could have a city that is cheaper for its residents, fairer, more resilient to change, healthier and more pleasant for its citizens.

What are we waiting for?

36 comments on “How can Auckland Supercity reduce residential rates? ”

  1. tc 1

    You reduce residential rates by getting business and developers to pay a fair share and get the massive amount of RUC’s, vehicle rego’s and taxes on fuel that the central govt derive from akl re-invested in its infrastructure.

    AKL has been ripped off for decades by central govt and supercity is designed to remove what little power it does have and the assets along with it.

  2. millsy 2

    Perhaps Auckland should adopt technological innovations and become NZ’s first smart city?

    • Sabine 2.1

      whom would you want to pay for that?
      Currently as it is the Rates are only paid in full by those that are owner / occupied.

      The rates on all other properties that are tenanted out are paid for by the Tenant, as rates, insurance and all these costs are factored in the rent, and if the rent payer can’t pay the rent anymore they can apply to a Accomodation Bennefitt errrrr Supplement, and then the Tax Payer pays for the rates.

      So I don’t actually get the screamers and whingers that go on and on about Rate increases.
      I understand the owner/occupiers that have had huge increases in their rates who is on a fixed income, but I guess, they could sell? Of course no matter how much money they would make would be enough to buy something else somewhere in AKL, but as I was told so often lately, they could move.

      See problem solved.

      But, there is one thing I would like to know, the transport levy of 115$ per person, is that levied by vehicle of Person? If it is levied by person does that mean a transport business like Ritchies, or Toll, or Courier Post are only paying 115$ per business or 115 per vehicle?

      • mickysavage 2.1.1

        Hi Sabine

        The transport surcharge is levied on residences and on businesses. I take this to mean that if you own a home and a batch then you pay two levies. If, like for instance Sky City, you own multiple properties all associated with your business you pay one levy.

        • Sabine 2.1.1.1

          but should the levy not be applied to vehicles?

          Lets assume Ritchie only has the one property out west auckland, one levy, but many many vehicles?

          Just wondering.

          Now Ritchie might not be the best example as they are public transport. but the same can be asked about any other Long Haul Tranpsort Company, or courier company. They should pay the levy by vehicle not by property, considering that they have more vehicles then properties.

          A bit like that dreaded ACC levy that I have to pay for my motorbikes, even tho the old one hardly ever hits the road, and i can only ride one bike at a time. 🙂

          • dukeofurl 2.1.1.1.1

            The recent big drop in ACC levies was a once in a generation chance for that ‘household levy’ for transport be applied instead to Auckland motor vehicles.

            Solves the ‘bus’ issue as well, $100 each vehicle each year is a lot more than say one levy for one property.

            There is a house up the road which might be a sort of boarding house, there are never less than 6 vehicles on the property.
            Most of my neighbouring households have around two vehicles each, I have one.

    • Brutus Iscariot 2.2

      Nah, we are dumb as pig ****.

      Sadly higher rates are necessary to make up for decades of under investment and shortcut solutions. Unfortunately the government has stymied all other forms of funding improved transport infrastructure, in an attempt to push Brown into an unpopular solution and destroy him.

      Our boomer representatives in Parliament, allied with local NIMBYs, have attitudes towards urban development that are so backward that it’s beyond belief.

  3. Ad 3

    Does this writer understand that the LTP and RLTP consultation has finished, the decisions have been made, and there is no chance of any legislative change to propose any of the things they want to happen?

    Or are they one of those citizens that wakes up once the debate and decisions are done and then complains about it?

    • mickysavage 3.1

      The business differential reduction is an ongoing process and will continue for a number of years. Future chances can always be affected.

      RLTP can also be changed from time to time.

      I agree the transport levy is set in stone. The proposal appeared very late and was not part of the consultation that occurred. Sure the horse has bolted but it should have been discussed publicly and I am pointing out how fundamentally unfair it is and why it contributes to rates increases.

      Salaries cannot be changed immediately of course but we are on a treadmill where top salaries continue to increase exponentially and this needs to change.

      The proposal to suppress travel demand is one that long term could save the city huge amounts of dollars.

      The post is an attempt to explain why rates increases are so high and what decisions could have been made to change this.

  4. dukeofurl 4

    Part of the problem is that we have a veneer of accountability, the councillors have very little say about the overall cost of running the city.
    Yes they pick and choose from a range of capital projects for things like parks, community centres, libraries.

    But THAT is it!. The other infrastructure projects are hived off in Rodneys Rabbit holes, such as Watercare, Auckland Transport, Ateed.

    The reason why the Mayor is paid so little compared to senior staff is because hes just like the ornate carvings at the bow of sailing ships- a figurehead

  5. vto 5

    One. Vehicles road taxes etc need to go to the roads which are being driven on.

    Two. The rating system is a very old system dating from when the wealthy had an obligation to look after their ‘tenants’ so paid such costs based on their wealth, crudely assessed through land ownership. This no longer applies in many ways and the entire rating system needs to change.

    Three. Break out the fluff stuff (festivals) from the actual stuff (drains). Entirely separate oeprations and entities, funded separately too.

    Four… abandon the SillyCity

    • dukeofurl 5.1

      You mean like the $10 mill over 5 years for Auckland NRL Nines ?

      The government was asked for money too, but they prefer to fund a golf event for a few hundreds in Queenstown

  6. millsy 6

    I don’t think you guys got my point, and the wrong end of the stick has been siezed but at the moment, I cannot be bothered explaining further.

    But what I will say, is that you cannot keep down/cut rates without massive cuts to council services, and asset sales programs. Christchurch is finding that out the hard way.

    That includes cutting/closing libraries, switching off street lights, selling parks and reserves (perhaps letting them go untidy a bit more?), closing halls, selling pensioner flats (and hiking rents), ripping out playgrounds, closing toilets, ripping out rubbish bins, etc. Proponents of keeping rates down, tend to cry crocodile tears for the poor before moving to cut services (like the above) that they benefit from.

    Here in the New Plymouth district, we elected a whole swathe of councillors who wanted to ‘keep rates down’, then they realised that doing this will require huge cuts to services, such as closing down pools and libararies.

    Im a rate payer, I pay about $40 per week in rates (that is what it averages out at), but I will NOT vote for someone who tells me that I will only need to pay $20, because I am not keen on losing services to pay for that (On the whole, I think paying $40 per week, to have my rubbish collected, running water, swerage disposal, library subscription, use of parks etc is pretty OK, given that I would be paying more to source those through private sector providers).

  7. Mike the Savage One 7

    There was a plan that was brought up by some media months ago, which has in the past been discussed again on and off. It involved the consideration that it may be cheaper to add to the existing rail system by also re-introducing trams again, traveling along some major traffic routes in much of central Auckland:

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11394366

    The argument is that going underground, like building the City Rail Link from Britomart along Albert Street and so, will involve high costs. Trams may prove a cheaper, but feasible, efficient alternative.

    I have at times been in favour of the inner city rail link, but the immense costs seem prohibitive. It appears also that Auckland’s mayor and Council want to grow the population, to “afford” their major transport and other infrastructure projects for the future, while there are very many Aucklanders who do not really want to live in a city the size of 2.5 million, as that will bring inevitable social and environmental changes and costs.

    Having more ratepayers AND having each of them pay more seems the only solution they have.

    There are many smaller cities in the world that are “global cities”, think of places like Geneva, Lausanne in Switzerland, Munich, Dusseldorf or Frankfurt in Germany, The Hague in Netherlands, Florence in Italy, Denver, Colorado and other places in the US, Valparaiso and Vina del Mar in Chile, all places well known globally, with their particular history, flair and lifestyles, and with better transport and other services.

    Why do Council and the mayor have this obsession of becoming a “global city” based on a larger population?

    I think that there is a lack of innovative, alternative thinking and planning in Auckland, definitely in much of the New Zealand population, rather looking at what is done in Australia, Canada, the US and the UK, to learn from, which is not always that smart, I fear, given they tend to follow similar neoliberal economics, based on growth, growth and more growth, much based on growing population.

    What “flair” or “cosmopolitan” atmosphere and lifestyle is there in Auckland, justifying what we get offered, and the costs coming with it, with a petrol headed population, too hesitant to get out of their cars and live more smartly and be more productive as individuals and a collective?

    • dukeofurl 7.1

      Not correct .
      “many smaller cities in the world that are “global cities”, think of places like Geneva, Lausanne in Switzerland, Munich, Dusseldorf or Frankfurt in Germany,

      Frankfurt metropolitan population 1.8mill . Plus its the capital of a state of 6 million.
      Munich is just under 2 mill, plus its the state capital of Bavaria 12.5 mill.
      Dusseldorf region has over 3 million.

      The transport costs of these cities are not borne in general by the small municipal councils that comprise the core.

      No more than Sydney City council pays for the metropolitan train network- its not a council responsibility its funded by the state government

      • Mike the Savage One 7.1.1

        Are you trying to tell me that the more provincial regions around listed cities subsidise the listed cities’ transport and infrastructure and not vice versa?

        I think you apply twisted logic, and what you say does not deliver any argument. Even if you were right, then you may as well say, that the high export earning provinces in New Zealand also somehow “subsidise” Auckland, forgoing much of the revenue they earn for the country, to let Auckland get it from Central Government to spend.

        I do not get what you are on about, as the cities listed do not simply represent “small municipal councils”, they actually cover significant areas.

        • dukeofurl 7.1.1.1

          You obviously have thought about the issues, but assuming the cities you mentioned are small doesnt match the available numbers.
          Hesse has a larger population than NZ but has same area as Hawkes Bay and Gisborne region. Rail transport suits an compact area with larger and moderate sized cities not far apart. This is why they have ‘better’ transport and have invested money in that over decades. Auckland rail was untouched from after the war till the late 1990s.

          Ive found many people look to Europe for better cultural facilities without considering population. eg Stuttgart has 0.5 mill people and a full time professional opera why cant Auckland.
          Stuttgart contiguous urban area a has over 2 mill people , and the immediate region has around 4 mill. This is the catchment for an audience for a traditional art form. Then Stuttgart is the capital of Baden Wurttemberg , one of germanys wealthiest areas and home to around 10 mill. Rich people and plenty of them are the audience for high opera. Waikato dairy farmers may be rich but they wouldnt be opera buffs.

    • Sacha 7.2

      “It appears also that Auckland’s mayor and Council want to grow the population”

      You’ve been drinking Ms Bright’s koolaid. Most of the projected population increase comes from natural internal growth (ie: breeding), regardless of what any officials may want or not.

      • Mike the Savage One 7.2.1

        That is just BS, roughly between half and two thirds of the growth has over longer periods come from natural growth, and from moves by people from other parts of the country to Auckland. The rest has been immigration.

        https://en.wikipedia.org/wiki/Demographics_of_Auckland

        Most new recent immigrants appear to prefer to settle in Auckland, so the future trend may be for not only more New Zealanders moving to Auckland, but also more new immigrants.

        http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11363797

        “Of the 107,200 permanent and long-term arrivals in the year ended October, 44,400 went to Auckland, offset by 22,600 departures.”

        As for Len Brown, I have read the Auckland Plan, know the Proposed Auckland Unitary Plan and what the agenda is. It is very clear, that the intention is to GROW Auckland, and the excuse used is that this is supposedly “inevitable”. Nobody even addresses immigration and internal migration to Auckland as a major cause for population growth, hence it seems it is not just allowed to continue, it is wanted. Intensification goes in hand with the aspirational growth intentions of business sectors, they all want more workers, more customers, more residents in Auckland, as they want more, more and more, ignoring potential negative health and environmental consequences.

        Health issues for urban populations:
        http://www.world-heart-federation.org/press/fact-sheets/urbanization-and-cardiovascular-disease/
        https://www.psychologytoday.com/blog/urban-survival/201412/health-effects-stress-in-the-city
        http://www.theatlantic.com/health/archive/2013/12/the-health-risks-of-small-apartments/282150/
        http://www.theguardian.com/cities/2014/feb/25/city-stress-mental-health-rural-kind

        http://www.who.int/bulletin/volumes/88/4/10-010410/en/

        • Sacha 7.2.1.1

          Hey I’m just relaying the content of a presentation by the ex-head Statistician for NZ and the UK. But what would he know, eh?

          • Mike the Savage One 7.2.1.1.1

            So what is your solution, just laissez faire, more of the same, let it grow until we have a little New York City between Albany and Huntly?

            What about a better alternative, to develop the regions, which of course necessitate government making decisions, and to PLAN, oh what a horrible word that is, “planning” and “managing”, oh yuk, those words are tapu these days.

            People tend to move where they think they may find jobs, as without a job life is rather shitty, no matter where you work, given the system we have, which is geared to make income dependent on work, jobs and business, and all else is a beggars existence on benefits, or sitting by the wayside, asking for a buck or two.

            If we had actual jobs that pay a living, and better opportunities in various regions, people may actually stay there, where they grew up, and also may migrants like to move there then.

            New Zealand is a big FAIL when it comes to planning for the future, well, it is not the worst of course, as it still does comparatively well, but it could do better.

    • greywarshark 7.3

      That’s an interesting observation by Mike the Savage.
      It seems to him that,Auckland’s mayor and Council want to grow the population, to “afford” their major transportwhich might mean that the are unable to accommodate thoughts on alternative methods that would be cheaper and not so invasive of land etc.

  8. infused 8

    Easy, stop spending like utter fucktards.

    • millsy 8.1

      Close libraries?

    • adam 8.2

      On roads, and on the privatised branches of council. I agree infused. We need to stop AT, Watercare Services, and the other wasteful out dated models which waste and drain on the public purse.

      The privatisation model is a massive flop, it is uneconomic and at this point, ideology for ideologies sake.

    • Molly 8.3

      Like approving behind closed doors a $10.6 million spend on V8 races in Pukekohe in 2012. One that was topped up a further $2 millionby the national government?

      Strangely enough, this was done at the same time that a $10 million upgrade to Pukekohe train station was being turned down for cost purposes.

      It is as if climate change is not even a consideration…

  9. RedLogix 9

    Actually rates in Auckland are not especially higher than most other parts of the country. Try owning property in Porirua for instance.

    I agree that these 8-10% rises every year are not sustainable. But Auckland does not have that problem on its own.

    • joe90 9.1

      Yup, try Whanganui – $3800 on a GV of $450,000 or Patea – $2000 on a GV of $45,000.

  10. Sacha 10

    Most of the answers to funding rely on government agreeing to them. Councils have asked for different ways to raise income for many, many years.

    This government continues to rule out other options for local transport funding in particular and cancelled the regional fuel tax that the previous government had finally approved late in their tenure. A temporary special levy is the only tool Auckland Council has. Current politics around their table meant a flat rate would get through (supported by the same folk who want the uniform rating charge much higher so that wealthier ratepayers pay less overall).

    Auckland has suffered from decades of under-investment by right-wing councils who prioritised ‘keeping rates down’. That’s like saving money by not re-painting a house. Your children end up paying to fix the rot.

    • Molly 10.1

      “Auckland has suffered from decades of under-investment by right-wing councils who prioritised ‘keeping rates down’. “

      +100

      We also now have a procurement model that takes away the often unpaid/uninvoiced care that many smaller providers did for their communities.

      Instead of promoting self-sustaining multi-use community facilities such as Moutere Hills, we have proposals for vast institutional sports centres like Kolmar in Papatoetoe, that houses 16 different sports but is empty like a museum for a considerable amount of time – even when players are on the fields. We confuse bigger with better, even though smaller centres are often well-utilised by communities as more members of the public can acquire some sense of ownership of smaller places that does not exist with larger ones.

      Most importantly, there should be opportunities given to innovators in areas to experiment with alternative methods of providing a liveable Auckland. Current operators and developers are both practiced and invested in the current system, and will be loathe to change approaches.

      • greywarshark 10.1.1

        I think that pollies and many community leaders are in love with the idea of building grand projects that stand as a physical memorial to them – something they can point to as an achievement to their time in power.

        Small community facilities don’t stack up to the grandiose stadium as in Dunedin. It is building for the option of hosting an international event, something glamorous. It is the same as overspending on the Olympics, but on a smaller scale. And they don’t care whether these things are justified for the money involved. There doesn’t seem to be the close cost-benefit-ratio critical eye run over them that happens with other infrastructure.

      • Sacha 10.1.2

        The ‘supercity’ was sold by National and Act as offering economies of scale. As you note, contracts are increasingly going to a smaller number of big operators in many lines of work.

  11. Colonial Viper 11

    The right tend to look at these projects and see only costs without measuring the greater benefits.

    Odd, they didn’t seem to have any problems assessing the long term benefits of a multi-year convention centre project.

  12. Penny Bright 12

    There is no such thing as ‘public transport’ in Auckland.

    There are 10 private bus companies, 4 private ferries and a French multi-national operating and managing Auckland trains.

    Auckland Transport has declined to provide the information which would detail how much public money has been used to subsidise Auckland private passenger transport services, since Auckland Transport came into being on 1 November 2010.

    Auckland Transport has failed to provide any ‘cost-benefit’ analysis which proves that public subsidy of private passenger transport services is more ‘cost-effective’ than in-house provision under the ‘public service’ model.

    If the private sector are so ‘efficient’ – why do they need public subsidies?

    Why should the public subsidise that which we no longer own, operate and manage?

    Why does Auckland Transport not directly run bus, ferry and train services ‘in house’ and cut out the ‘for profit’ private sector?

    How many hundreds of million$ could be saved by opening the books and cutting out the contractors?

    Penny Bright

    http://www.pennybright4mayor.org.nz

  13. keyman 13

    why not cut out community hall that hardly used remove duplication stop paying consultants to the point where the whole budget is gone and the project never gets started ,don’t buy buildings like old asb bank building that costs more to renovate than build a new one, the living wage is needed by the none direct council staff there ones being ripped off staff that work under service contracts

  14. RedBaronCV 14

    No need to put up rates to pay a living wage. Just lop $ 20,000 off the lot paid over $200k. Could pay even more if all the excessive salaries at the CCo’s where included. Actually redistributing high end wages plus the profits being made where there is outsourcing towards the lower end and ratepayers would give some decent outcomes.

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