Leaky home bill passed to next generation

Andrew McKenzie, council chief financial officer, estimated $974 would be added to every Auckland ratepayer's bill if the $487 million were to be charged in one year, an unreasonable burden. Photo / Steven McNicholl

Nearly $500 million debt to fall on future Auckland ratepayers in draft plan.

The children and grandchildren of Auckland's ratepayers are to be saddled with nearly $500 million debt to fix tens of thousands of the region's leaky houses.

Auckland Council's draft long-term plan has budgeted to borrow $487 million to fund the disaster.

But the council warned the full sum could be much higher. Submissions to the plan close today.

Andrew McKenzie, council chief financial officer, estimated $974 would be added to every Auckland ratepayer's bill if the $487 million were to be charged in one year, an unreasonable burden.

"It's fairer to spread this out over time," he said, explaining how the bulk of the expense was expected in the next four to five years because of the 10-year limit put on leaky building claims resulting in fewer cases going to court.

"Council had to work out whether or not, if you happened to be a ratepayer in the next four or five years, it would be fair to charge those people," he said.

Instead, it was decided to spread the load and cover the debt over 30 years.

But councillor Cameron Brewer said rates and current income should fund the terrible legacy.

"Sadly it's the future ratepayers of Auckland who will have to stump up the cash over the next 30 years to right the wrongs of a 1991 Building Act which reduced building controls and standards; developers, builders and architects who cut corners, and former local authorities that failed in their inspection duties. All mistakes that are sadly set to be paid for by the next generation of Auckland home owners. It's an outrage," he said.

"Half a billion dollars over the coming decade is probably only the start for Auckland ratepayers. Let's not forget that only a small minority of leaky homes have been repaired so far and the total cost nationwide has been estimated at $11.5 billion," he said.

"Even if you calculate very conservatively that half the leaky homes are in the Auckland region, well that's nearly $6 billion and with local authorities meeting 25 per cent of the agreed repair costs, then there's $1.5 billion for Auckland Council right there."

But the council defended borrowing to fund the disaster.

"Rather than penalising current ratepayers with the full impact of these settlements, it is assumed they will be funded from borrowings and the repayment of these borrowings spread over 30 years," the council said.

"Based on an updated assessment ... the council is forecasting claim payments of $487 million over the period of this plan."