South Aucklanders will struggle if Auckland Council raises rates, advocates say

Auckland Council is expected to make $270m in cost savings over the next three years and sell $210m worth of surplus property as part of its 10 year Recovery Budget. Photo / LDR

LDR_STRAP

A proposed 5 per cent rates rise and increased water charges will be too much for many South Auckland residents, a councillor says.

Auckland Council’s Recovery Budget went out for public consultation on Monday.

In November, the council announced it was expecting its revenue to fall by $450 million due to Covid-19, and the loss could snowball to nearly $1 billion by 2024.

As part of the consultation process for the 10-year budget, which will run from February 22 until March 22, Aucklanders will be asked whether they support a one-off 5 per cent average general rates increase for 2021/2022, followed by increases of 3.5 per cent a year until 2031.

Under the rating proposal, the rates bill for an average South Auckland household with a capital value of $752,000 would increase from $2383.50 in 2021/2022 to $3248.46 in 2031.

The council is looking at increasing its net debt, which was sitting at $9.9b in September, by lifting its self-imposed debt ceiling from 270 per cent of revenue to as high as 290 per cent over the first three years of the plan.

But Manurewa-Papakura councillor Daniel Newman said the supercity needs to rein in its spending to deal with its Covid-19-induced drop in revenue.

“I think the proposed 5 per cent rate increase will be too high for some ratepayers. But I also believe that unless the council significantly reduces expenditure, a one-off 5 per cent increase in [financial year] 2021-22 will not be enough,” he said.

He said the council faces enormous cost pressures due to years of failing to properly fund the maintenance of existing assets.

“I am firmly on the side of maintaining and renewing our utility assets and community facilities, and this needs to be funded.”

Newman said Watercare’s higher water charges will also have an impact on many South Auckland families.

In December, Watercare approved an annual price hike of 7 per cent in 2021 and 2022, 9.5 per cent from 2023 to 2029, and 3.5 per cent until 2031. This would see the average annual water bill for a household increase from $1069 in 2021 to $2261 in 2031 – a $1192 increase over a decade.

Watercare’s increased charges and capital expenditure programme have been included as part of the Auckland Council’s 10-year budget.

But Newman said more increases will be needed over the coming years to pay for expansion of its network to accommodate urban growth, as well as to ensure compliance with new drinking water standards.

Alanah Baker is a financial mentor with the Society of St Vincent de Paul, which is based in Ōtāhuhu. The organisation provides budget advisory services across south Auckland.

Baker said despite the fact only 6 per cent of the people in the Ōtāhuhu area own their homes, they will still be hit by rising rates and water charges.

“It’s a very tough situation for tenants and it will impact on them through rent increases,” Baker said.

“It doesn’t seem like the landlords out there want to absorb these costs and they just pass them on to their tenants.

“So things like rate rises will affect our clients, but what can we do about it?”

Baker said at the end of the day the taxpayer will end up picking up the tab through the accommodation supplement.

Māngere Budgeting Services Trust chief executive Darryl Evans said his staff have reported their clients being concerned about the impact the rates could have on their rents.

“Landlords will normally just pass on those costs to tenants and some of our clients are concerned their rents will go up,” he said.

Evans said 63 per cent of its clients are paying 65 per cent or more of their income towards rent.

“Lots of our families are telling us they are looking for cheaper rents. But landlords know they can get more in rent and Work and Income will pay.”

In a statement last week, Auckland Mayor Phil Goff said the Recovery Budget was necessary to help the city recover from the massive economic damage caused by Covid-19.

“We also need to continue investing in the critical infrastructure, services and facilities Auckland needs to be a world-class, internationally competitive city, while responding to the challenges of climate change and population growth.”

Those thoughts were echoed by finance and performance committee chairwoman Desley Simpson.

“While we are continuing to focus on a very high savings target of $90 million as well as providing value for money to Aucklanders — doing more with less — we need to find a balance that enables us to provide much-needed investment in our ageing infrastructure so that our city continues to be a great place to live, visit, and do business.”