Rates hike to hit hard in poor areas

Across Auckland, the average rates bill over three years will rise from about $2200 to nearly $2600. Photo / Doug Sherring

Council’s transport levy, general rise mean 16% jump for low-income suburbs.

People in many of Auckland's poorest suburbs will pay dearly for a transport and general rates package costed at $214 for the average household.

Auckland councillors yesterday voted 15 to seven for a new transport rate and will vote today on a general rates increase.

The combined impact is likely to be a 9.9 per cent average rates rise for households from July.

However, a number of factors, including fixing the transport rate at $114 for every household, will have a bigger impact on suburbs like Mangere, Otahuhu, Beach Haven and Glenfield.

These suburbs face 16 per cent-plus increases in the coming financial year, or more than $300.

At the end of Mayor Len Brown's three-year "interim" targeted rate for transport, the rates bill for an average household in these poorer suburbs will have risen from about $2200 to nearly $2700.

Hefty rates rises are not limited to poor areas.

The well-off suburbs of Mt Eden and Mt Albert are in line for a 14.9 per cent jump, partly due to rising house values.

Across Auckland, the average rates bill over three years will rise from about $2200 to nearly $2600 to fund a $523 million transport programme, mostly for public transport.

Kaipatiki Local Board member Grant Gillon said people in suburbs like Beach Haven could not afford a 16.1 per cent rates increase, which was worse than a previous plan for an 11.1 per cent hike.

He said the focus should be on savings to large schemes and not miserly cuts to core services such as sports fields and library hours.

Left-leaning councillors Ross Clow and Mike Lee also pointed to the downside of the fixed transport rate on low-income people.

Mr Clow failed with an amendment to increase the general rate to 3.5 per cent to soften the blow.

The proposed rates increase comprises a 2.5 per cent general rate and a 4.4 per cent targeted rate to top up spending on transport - an overall total rates increase of 6.9 per cent.

Because of revaluations and a plan to lower business rates, the average proposed increase for households is 9.9 per cent.

Mr Brown, who promised to hold rates increases to 2.5 per cent this term, was uncomfortable imposing what he dubs the "transport levy". He refuses to call it by its legal name of a targeted rate.

"This is a not a celebratory day - 'Yee-ha, we're going to ask the community for a transport levy'," he said.

Councillors, and others like youth organisation Generation Zero, welcomed the targeted rate for its boost to transport spending.

Generation Zero spokesman Dr Sudhvir Singh said: "This budget prioritises the essential public transport, walking and cycling projects that Aucklanders have called for, and is another step in the right direction for our city."

Walking and cycling will get an extra $110 million and public transport $170 million over three years.

The council consulted Aucklanders on a motorway toll or fuel tax and rates to fill a $12 billion transport funding gap over 30 years, but failed to get Government backing.

Howick councillor Dick Quax said Mr Brown had said the people of Auckland were prepared to put their hands in their pockets and pay more for transport.

"That may be true if it comes to a fuel tax or toll.

"What we consulted on was a voluntary exchange for getting something of a service but not a coercive tax.

"We didn't consult on that."

Deputy mayor Penny Hulse said the council could not wait for the Government to allow a tolling option.

The council's pound of flesh, she said, was the transport levy.

Double trouble for some

Martina Rangihuna owns an investment property and also rents. Photo / Supplied

Like many property owners in Auckland, Martina Rangihuna will be hit twice by the rates increase.

She owns an investment property in New Lynn which faces a 9.9 per cent hike, and will also have to pay more at her rented Mt Eden home to cover her landlord's high rates bill.

She was unimpressed by the increase.

"People will struggle. People are struggling already," she told the Herald. "This is really going to hurt Auckland."

Ms Rangihuna said she understood the decision to raise rates, and supported improvements to transport and infrastructure.

"I get it, I do. I get really frustrated with transport here. But I think the Government should be doing more.

"Auckland is New Zealand's largest city, it's the hub of the economic vibe - so why the hell is the Government making the council pay to improve it? They should be making every bloody effort to keep Auckland up to standard."

Ms Rangihuna expected her rent to increase even further given yesterday's decision.

"It's already gone up, but like me, my landlord will have to pay more rates. It's a double whammy for me - I will be paying more rent and more rates on my investment property. It's not great."

Q&A

Why are rates climbing?
The Government rejected a council request to introduce tolls or a fuel tax to help fund transport. That left the council in a quandary. Spend less on transport and allow congestion to get worse, or increase rates. The council chose the latter.

Why does the targeted rate affect poorer suburbs more?
The targeted rate is a fixed charge of $114 for households. This is a lot of money for a low wage family and peanuts for a Herne Bay millionaire. It results in a bigger percentage rates increase for people in low value properties, typically in poor suburbs.

Was there an alternative?
Yes. A motorway toll or a fuel tax and a targeted rate of about 1 per cent a year would have funded a comprehensive transport budget. The council consulted on the two alternative funding options, with a majority favouring tolls and 27 per cent supporting a petrol tax/rates option.

What is the transport targeted rate for?
It will raise about $180 million over three years to fund $523 million of new spending on transport. Walking and cycling will get an extra $110 million and public transport $170 million. For example, it will pay for 45km of new bus lanes.