In part two of a two-part series on Auckland’s spending plan, Bernard Orsman looks at ratepayers’ views on rates and city debt

Rates

The prospect of hefty rates increases are going down like a lead balloon in feedback on the new 10-year budget.

With only three days until feedback on the budget closes, 80 per cent of Aucklanders who have responded say the proposed overall rates increase of 3.5 per cent is too high.

Read more: Super City's 10-year budget: The good, the bad and the ugly

The picture is bleaker for households than for businesses. Households face rates increases of 5.6 per cent this year and 4.5 per cent a year thereafter. The 5.6 per cent figure is due to new property revaluations and lowering of business rates.

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For an average Auckland house valued at $750,000, rates will rise by about 56 per cent over 10 years, from $2159 now to $3360 in 2025.

In the 2015/2016 year, about 126,000 households - more than one in four - face increases of more than 10 per cent, 25,000 households face increases of more than 20 per cent and 3738 households face 40 per cent-plus increases.

On the other side of the ledger, 118,000 households, many in West Auckland, Rodney and the Gulf Islands, will get a rates decrease.

Suburbs facing the biggest rates rises include Mt Eden and Mt Albert (11.7 per cent), Glenfield and Birkdale (11.3 per cent), Hillsborough (10.2 per cent) and working-class Mangere and Otahuhu (9.6 per cent).

Areas with sizeable rates cuts include Great Barrier (-20.5 per cent), Waiheke (-6.7 per cent), Rodney (-6.2 per cent) and Papakura (-3.1 per cent).

The budget proposes reducing business rates from 32.8 per cent of total rates revenue to 25.8 per cent by 2025. Business rates increases would average 1.6 per cent this year and gradually reduce to 0.8 per cent by 2025.

This is good news for business but bad news for households. Feedback shows about 60 per cent of Aucklanders do not support gradually reducing business rates.

Aucklanders are also being asked their views on a uniform annual charge of $385, which is at the lower end of what every ratepayer could pay towards council services regardless of property value.

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The lower charge benefits people in cheaper homes, but leads to the owners of expensive homes paying higher rates. The maximum charge the council can set by law is about $900.

About half of Aucklanders support keeping the charge at $385, while views are split on raising or lowering it.

Watercare is proposing to raise water charges by 2.5 per cent for the next two years and 3.6 per cent a year thereafter.

Debt

After racking up $3.4 million of debt in five years, Mayor Len Brown is applying the brakes.

Conscious that Aucklanders have no appetite for large increases in debt, Mr Brown is halving the amount of borrowings to fund projects.

Debt rose by an average $680 million in the first five budgets to $7.3 billion. It will increase by an average $350 million to $10.8 billion by 2025.

This is well below earlier forecasts of $13.7 billion, but if the council chooses to adopt the more expensive "Auckland Plan transport programme" with a $2 motorway toll or a regional fuel tax and higher rates, budget papers say debt could rise by $1.7 billion to $12.5 billion.

The extra debt would fund extra spending on transport until revenue from the new taxes kicks in.

Senior finance manager Matthew Walker says debt will play a smaller role in funding capital projects in future years.

The council, he says, has four main funding sources for capital works - external sources such as the New Zealand Transport Agency and development contributions, proceeds from asset sales, debt and rates.

In future, the council will become less reliant on debt and have more cash from the other sources, particularly rates, to fund capital projects, says Mr Walker.

The council has provided the Herald with a list of the 10 biggest capital projects funded by debt over the past five years, the largest of which are new electric trains and an electric train depot.

The $316 million Ameti transport project, in eastern Auckland, is next at a net cost of $200 million to ratepayers. Other transport projects include land acquisition for the city rail link ($168 million) and the city's long-awaited integrated fare system for public transport ($83 million). Debt has also funded the council's new $105 million headquarters and $195 million on information technology.

Have your say

Public consultation on the new 10-year budget closes at

4pm on Monday

.

For information on how to have your say on the 10-year budget, visit:

What happens at the end of public consultation?

• Councillors and local board members will be given feedback in April before the budget committee makes final decisions on the budget in early May.

• If the council decides to introduce tolls or a regional fuel tax, Government approval and legislation will be required.

• The governing body will adopt the final budget on June 25 to kick in on July 1.

Hefty rates increase

The Salter family. Photo / Jason Oxenham
The Salter family. Photo / Jason Oxenham

Angela and Geoff Salter live in a modest brick and weatherboard house in Mt Roskill with three children, aged 10, 9 and 7.

Geoff, a builder, and Angela, a customer service worker, have a combined income of $110,000.

The Salters have no spare money for fancy holidays. They use the Mt Roskill library at least once a week and the children play at Mt Roskill Memorial and Keith Hay Parks.

"The rates just keep going up," says Mr Salter, who as a contractor works 50 weeks a year with no pay rises, no holiday pay and no sick pay. The Salters face a 17.7 per cent rates increase this year on the house they bought 14 years ago for $180,000, now valued at $840,000.

Their rates this financial year are $2327. They are forecast to be $2740 from July, or another $100 each quarter. That's more pressure on an already tight household budget.

Mrs Salter is also worried about a proposed $2 motorway toll, which she would have to pay to travel to and from her job at the airport.

She agrees with the need for greater investment in public transport, but believes tolling should apply only to new roads.

Mrs Salter says the Super City was sold on the premise of cost-savings but that has not happened and that the way things are going "it is never going to happen".

It grates that Mt Roskill library will close at 6pm four nights a week. The couple often visit the library with their children after 6pm.

They want the extra hour to stay, not see their rates fund a $100,000 silk curtain at the new $8.3 million Devonport Library.

"That sort of thing is over the top," says Mr Salter, who wants the council to focus on core services and servicing debt.