Aucklanders will have a say on three proposals for rates rises next year.

Auckland Mayor Phil Goff's first budget proposal will include options for a 2 per cent, 2.5 per cent and 3.5 per cent rates rise and the implications for each option.

Goff is running with a 2.5 per cent rates rise in line with his election promise but his finance chairman Ross Clow is "deeply concerned" about moving away from the 3.5 per cent rates rise in the long-term budget.

While expressing concerns about the pressure a 2.5 per cent rates rise will put on the budget, particularly transport, Clow supports the mayor's option.


A group of right-leaning councillors are pushing for a 2 per cent rates rise, but council chief executive Stephen Town has warned that could be too much of a stretch and lead to cuts in core services.

Even a 2.5 per cent rise would be challenging said Town, saying a $400 million gap in a new transport agreement between council and the Government was conservative and the goal was to accelerate spending on transport.

The budget also includes a targeted rate on hotels and accommodation providers to raise between $20 million and $30 million, and a proposal for a living wage.

The living wage, which former Mayor Len Brown unsuccessfully tried to implement, has drawn strong support and opposition around the council table.

Goff said he was seeing far too much poverty around the city, and quoted comments that poverty comes because wages are too low for people and living costs are too high.

"Yes, there is a cost to the living wage, but there is a cost to not having the living wage, " Goff said.

Collins, a councillor from Manukau, said there was great benefits to a living wage.

"It sends some of our kids going to school in South Auckland ... with food in their stomachs, which means they can learn," he said.

Said Manurewa-Papakura councillor Daniel Newman: "It's embarrassing to think there are people earning so little. Let's make a commitment now and go for it.

But a number of councillors, including Linda Cooper, Greg Sayers and Dick Quax, have questioned the living wage proposal.

Quax said he could not support the living wage and opposed the council using its coercive rating powers to implement it. He was also concerned about the affect of the living wage for council staff on private contractors.

Sayers recorded his vote against the living wage.

Sayers, who pushed for the 2 per cent option to be included in the budget consultation process, said council would have to find savings of $30 million for a 2 per cent rise, on top of $69 million to achieve a 2.5 per cent increase.

Sayers said an extra $30m of savings on council's turnover of $3.8bn is a 0.79 per cent saving, any chief financial officer in the private sector would be expected to provide options for making far larger savings and ratepayers will now have the ability to have their say.

Sayers is one of several councillors who signed the Auckland Ratepayers Alliance pledge to hold rates increase to 2 per cent.

The draft budget goes out for public consultation on February 27. It is due to be finalised in June and come into effect on July 1.