Rates pain poised to hit in Hubbard zone

Household rates in Auckland City are set to soar 13.2 per cent this year as the result of booming house prices, the hefty cost of rapid growth and years of under-investment in essential facilities such as stormwater and footpaths.

The increase follows last year's household increase of 9.7 per cent under Mayor Dick Hubbard and the left-leaning City Vision-Labour-controlled council. Furthermore, Mr Hubbard's council plans to keep hitting households with rates increases above the rate of inflation over the next nine years, starting with a real rates increase of 2.1 per cent next year and 4.7 per cent the year after.

Last year Mr Hubbard promised that this year's rates rise would be "substantially less" than last year's.

The rating policy is expected to be passed today at a two-day budget meeting that kicked off yesterday with finger-pointing and skirmishes about the affordability of rate rises.

Chief executive David Rankin sought to put the budget in context, saying the council faced a growth explosion from 420,000 people to 530,000 by 2021, increasingly sophisticated expectations for new facilities such as the indoor arena and a legacy of under-investment in infrastructure.

Big and costly opportunities, like the Tank Farm waterfront development and Rugby World Cup, required immediate action or would be lost, Mr Rankin said.

The council has set aside $100 million towards upgrading Eden Park for the World Cup or a convention centre but finance committee chairman Vern Walsh said it had yet to receive a costings or funding request towards the upgrade.

Citizens & Ratepayers Now leader Scott Milne said "this little city cannot afford the things that it wants" and with his colleague, Doug Armstrong, criticised the affordability of the council's 10-year plan.

"Affordability, whether you like it or not, is a major issue for ratepayers. Rates increases can be kept within the rate of inflation," Mr Armstrong said.

But City Vision leader Dr Bruce Hucker said Aucklanders could afford the rates increase on the grounds that the rise was only 1.9 per cent above inflation and Government and council rate rebates were worth up to $1200.

The 13.2 per cent household rates increase is broken down to:

* 5 per cent from house prices rising faster than commercial property - transferring a larger share of the overall rates income to households.

* 1.9 per cent from an ongoing plan to reduce the higher level of rates paid by businesses.

* 3.2 per cent inflation.

* 1.2 per cent for higher rubbish and targeted rates.

* 1.9 per cent above inflation to fund new projects.

Dr Hucker pointed the finger at previous C&R Now councils for holding rates at the level of inflation at the expense of neglecting infrastructure.

The news is not all bad. Business rates are near inflation at 3.4 per cent and CBD rates, which are higher than other business rates, are in for a 4.6 per cent rates reduction.

The Waitakere City Council will discuss rate setting today.

The North Shore City council said last week it would raise rates by 9.9 per cent this year.

The Manukau City Council, which is changing its rating system this year to be based on annual value, is setting an average rates increase of 5.9 per cent when it announces its long-term plan on June 29.