Aucklanders brace for rates shock

Mayor Len Brown. Photo / Sarah Ivey

More than a quarter of a million Auckland households are in for a shock when rates bills averaging an 8.1 per cent increase arrive in letterboxes from this week.

On Thursday, North Shore, Waitakere and Rodney households and businesses will be the first to feel the impact of a single rating system for the Super City under which some rates will go up and others will go down.

The rest of Auckland will receive the bills next week.

Mayor Len Brown describes the merging of the eight former councils' rating systems into one as "a very difficult situation".

Council figures show the new system will give 256,000 households an 8.1 per cent average rates increase, and 187,000 households an average 4.9 per cent decrease.

Hardest hit are many suburbs of the former Auckland City Council, such as Remuera, Mt Eden and Mt Roskill, plus Howick. Areas where household rates will be down include West Auckland, Papakura and Franklin.

Yesterday, Mr Brown said the average rates increase throughout the the region was 3.6 per cent, and the swings were an inescapable consequence of a Government-imposed rating system based on capital value.

He said the move to a single rating system was the final piece in the jigsaw for the Super City, and it was only fair that Aucklanders paid the same in rates everywhere in the region.

The council had strived to forge the fairest possible path and taken of steps to reduce the effect of amalgamation.

These included making $1.7 billion in savings over the period of his first 10-year budget.

Nevertheless, Mr Brown acknowledged that the introduction of a single rating system was the biggest challenge of the new council, particularly for those ratepayers facing big rises during an economic recession.

The last thing he wants is a repeat of the regionwide rates revolt that occurred when the Auckland Regional Council introduced a single system in 2003 that pushed rates bills up by as much as 467 per cent in some suburbs.

The Auckland Council has received Government backing to cap rates increases at 10 per cent a year for three years and decreases at 5.6 per cent this year, 3.8 per cent next year and 3.7 per cent in year three.

Without the ability to cap rates, about 133,000 households would have faced increases of more than 10 per cent.

For 84,000 of them the increase would have been more than 15 per cent.

Businesses do not have a cap and will change to the new system in equal steps over three years.

This will result in about 8000 small businesses and 1700 large businesses facing three consecutive rates increases of more than 10 per cent.

The new rating system will also affect water bills. From this month, most households will pay for wastewater based on a fixed charge of $190 plus $2.28 per 1000 litres of water. Most of the former councils charged for wastewater through rates.

The leader of the right-leaning Communities & Residents group on the council, Christine Fletcher, said the increases were sharp, unexpected and unsatisfactory. Writing in today's Herald, Mrs Fletcher said many people in highly stressful financial situations faced three years of rates increases of 10 per cent by which time the new housing revaluations would start the cycle again.

She expressed concerns about Mr Brown's 10-year budget - forecasting rates increases of 4.9 per cent in the following years - saying there was no wriggle room if the predictions fell short.

Orakei councillor Cameron Brewer said the capping and phasing policy might lessen the instant pain but it could prolong the agony.