Ratepayer backlash may be the last remaining obstacle in front of a council bid to hike rates 9.7 per cent.

This week Tauranga City Council removed another obstacle by voting to change its rules to allow a rates increase exceeding a cap in place for the past six years.

The council says the increase is necessary to have enough money to pay for urgently needed infrastructure to catch the city up to its growth, but others say the decision shows fiscal irresponsibility.

In 2012 the council decided to limit rates increases to the Consumer Price Index plus 2 per cent, after growth.


This week elected officials voted to temporarily lift the cap to 9.7 per cent and remove the index measure for the next five years.

Latest financial estimates in the council's plan for the next decade put the average rates increase on July 1 this year at 9.7 per cent.

A new rating system meant that would work out to 5.5 per cent for the average residential ratepayer and 28.5 per cent for a commercial ratepayer.

The plan will go out for community consultation in March.

Deputy Mayor Kelvin Clout said he could not see any way of avoiding rates increases in the face of the city's "significant" needs.

If there were widespread community support for cutting back on infrastructure or services the council would listen, he said.

Councillors Rick Curach and Catherine Stewart voted against the change.

Curach said the council had approached planning for the next decade backwards and had failed first to determine what the city could reasonably afford.

"Let's put this in a domestic situation. People live within certain budgets. They establish their spending before looking at what they want."

Council chief executive Garry Poole said the council had set out to make a plan that reflected the true needs of the city.

"The way we approached it is far more correct than setting a limit. All you do then is create a constrained Long-Term Plan that does not speak to the needs of the city for the next decade."

Former councillor Murray Guy said the 2 per cent cap was hard-fought and he was "gutted" to see it increased.

"Financial discipline has gone out the window. This council are treating us like an ATM machine."

Ratepayer backlash was the only thing the council would listen to.

"We need to motivate the community to take an interest."

Tauranga Western Bay GreyPower president Jennifer Custins said her personal view was that the council was "in between a rock and a hard place".

She had seen the scale of the city's need but also appreciated that any rates increase could make life difficult on a fixed income.

Tauranga Chamber of Commerce chief executive Stan Gregec said the commercial rates rises would come as a "nasty shock" to many in the business community.

Debate in the chamber

FOR: Councillor Max Mason

"Tauranga is booming. People are pouring in because they like living here. They wouldn't want to move here if it was all doom and gloom and rates skyrocketing and all that. The majority of people are prepared to pay. People who move here are shocked at the lack of social infrastructure. People are happy to pay more rates if they get more value. The tail has been wagging the dog for far too long."

AGAINST: Councillor Rick Curach

Local government seems to be always spending more and more and what is delivered in proportion to spending seems to be not so much. I won't support the amount we are seeking because it's just too much. We can redistribute the demand, but that just means someone else has to pay. We should just be looking really closely at the areas we are spending. It's come to a point where we have to say no."