Kerre Woodham: A rates cap or an erosion of services and facilities?

Auckland households face a 7.9% rate rise next year, primarily to fund the operating costs for the $5.5 billion City Rail Link, which is nearly finished. It's a reality, it's going to open for passengers next year – woo! The increase will cover the $235 million annual cost of operating the new underground rail service. It's the largest rates rise since Auckland Council as a super city was formed in 2010. For the average household wondering what on earth to do with all the extra money that comes into their bank accounts, annual rates will climb from $4,023 to $4,341.

Auckland Mayor Wayne Brown's rates announcement came shortly after Christopher Luxon announced at his post-cabinet press conference yesterday afternoon that the Government's going to introduce a rates cap of 2 %to 4% from January 27. The cap will exclude water charges and non-rate revenue such as fees and license fees and things like that. Very good politically. Who doesn't want somebody to say, "Hey, you greedy grasping councils, stop taking our money and delivering nothing in return."

But as Wayne Brown pointed out, how would Auckland be able to pay for its city link if it didn't have the facility to raise rates? Wayne Brown told the Herald, putting a cap on rates isn't going to solve anything, it'll just defer it for a couple of years, then ratepayers will be paying even more. He said councils are faced with making decisions that involve significant investment and should not be restricted by governments telling us what we can and cannot do. All very valid, provided of course that councils are sensible husbands of their ratepayers' money.

We can all think of absolutely barking mad vanity schemes that have been undertaken with ratepayers’ money that incense us and infuriate us. And there's very little we can do. You could always try voting, those 70% of you that don't, but you won't be listening to this radio show probably. And if you've got a council that doesn't really know what it's doing and doesn't know how to keep control of the different departments and can't really manage long-term investment infrastructure and a long-term rates plan, suddenly turning off the money tap is not going to turn them into brilliant budgeters. They're not going to suddenly gain the skills overnight because there's less money to pay with, play with. If you're making dumb decisions now, you're still going to be making them in 2027.

Rate capping or rate pegging has been in force in New South Wales and Victoria for several years and is loosely based on the rate of inflation or the consumer price index, which is what we've done. We've looked at Australia and thought we can do this here. In New South Wales and Victoria, the councils can apply for higher caps, but the process is complicated and deeply controversial with their rate payers, not surprisingly. Ratepayers like not having to pay significant rate increases, but the sorts of things they want to see, swimming pools, sports facilities, libraries, lifestyle infrastructure, are getting further and further away from local councils to deliver because they're under the pump financially. They just haven't got the money to do it. If you reduce your rate collection, you won't have as much money to maintain services or implement them.

So what do you want as a ratepayer?

We were talking about this earlier and, you know, one of our young producers doesn't use his local swimming pool. He said, "Can I opt out of funding that?" And I'm like, "Well, I'm all in. Our family uses the local swimming pool, uses the local library, loves it."  We can opt in. Can it be like a car wash, where you get your basic car wash and then you can do the add-ons? Do you want the wax? Sure. Tick.

Could they have a bare bones rate structure, or would it be simply too difficult to implement?

At least in Auckland you can see what you're paying for, and I assume it's the same if you're in Hamilton or Timaru or New Plymouth. You can actually see the projects. When you're paying rates in places like the Hokianga, we don't get rubbish collection, we don't have water that comes from the sky. We have sewage that is collected on site in septic tanks, don't have lighting, any pest control I'm doing. You don't get a lot for your $3,000.

So at least in the cities you can see what you're getting. There'd be some of you paying rates wondering what on earth you're paying them for. I'd be very interested to hear your rate stories. Could you have, would it be too difficult to implement? It probably would, but would you like to see an option?

You can have economy, business class, or first class in terms of what you pay for in rates and what services you can access.

Does a rates cap appeal to you or can you see it just being a gradual erosion of services and facilities?

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerrywood and Mornings podcast from News
Talks Hed.

Speaker 2 (00:10):
B Auckland households face as seven point nine rate rise
next year, primarily to fund the operating costs for the
five point five billion dollar city rail link, which is
nearly finished. It's a reality. It's going to open for
passengers next year. Woo. The increase will cover the two
hundred and thirty five million dollar annual cost of operating

(00:33):
the new underground rail service. It's the largest rates rise
since Auckland Council as a Supercity was formed in twenty ten.
For the average household wondering what on earth to do
with all the extra money that comes into their bank accounts,
annual rates will climb from four twenty three to four thousand,
three hundred and forty one dollars. Auckland Mayor Wayne Brown's

(00:57):
rates announcement came shortly after Christopher Luxen announced at his
post cabinet press conference yesterday afternoon that the government's going
to introduce a rates cap of two to four percent
from January twenty seven. The cap will exclude water charges
and non rate revenues such as fees and license fees

(01:19):
and things like that very good politically. Who doesn't want
somebody to say, hey, you greedy, grasping councils, stop taking
our money and delivering nothing in return. But, as Wayne
Brown pointed out, how would Auckland be able to pay
for its city link if it didn't have the facility
to raise rates? He Wayne Brown told The Herald putting

(01:41):
a cap on rates isn't going to solve anything. It'll
just defer it for a couple of years. Then ratepayers
will be paying even more. He said, councils are faced
with making decisions that involve significant investment and should not
be restricted by governments telling us what we can and
cannot do. All very valid, provided of course, that councils

(02:01):
are sensible husbands of their ratepayers money. We can all
think of absolutely barking, mad vanity schemes that have been
undertaken with ratepayers money. That and sense us infuriate us,
and there's very little we can do. I mean, you
could always try voting those seventy percent of you that don't,

(02:26):
but you won't be listening to this radio show probably,
And if you've got a counsel that doesn't really know
what it's doing and doesn't know how to keep control
of the different departments and can't really manage long term
investment infrastructure and a long term rates plan. Suddenly turning

(02:50):
off the money tab is not going to turn them
into brilliant budgets. They're not going to suddenly gain the
skills overnight because there's less money to play with. If
you're making dumb decisions now, are still going to be
making them in twenty twenty seven. Rate capping or rate pegging,

(03:10):
which sounds a bit rude but isn't has been in
force in New South Wales and Victoria for several years
and is loosely based on the rate of inflation or
the consumer price index, which is what we've done. We've
looked at Australia and thought we can do this here.
So in both states, New South Wales and Victoria, the
councils can apply for higher caps, but the process is

(03:34):
complicated and deeply controversial with their ratepayers. Not surprisingly, ratepayers
like not having to pay significant rate increases, but the
sorts of things they want to see swimming pools, sports facilities, libraries,
lifestyle infrastructure are getting further and further away from local
councils to deliver because they're under the pump financially, they

(03:56):
just haven't got the money to do it. If you
reduce your rate collection, you won't have as much money
to maintain services or implement them. So what do you
want as a ratepayer? We were talking about this earlier,
and you know, one of our young producers doesn't use
his local swimming pool? He said, can I opt out

(04:19):
of funding that? And I'm like, well, I'm all in.
Our family uses the local swimming pool, uses the local library,
loves it. We can opt in. Can it be like
a I don't know, a car wash where you get
your basic car wash and then you can do the
add ons? Do you want the wax sure tick? You know,
so our young colleague might opt out of the things

(04:42):
he doesn't use. Pay a base rate to keep the
pipes unclogged and the storm water drains clear, to get
the the rubbish collected from the curb, but then opt
out of the nice things. I'm going to go for
the platinum experience of library, swimming pools and beautiful parks.

(05:09):
I'm all good with those, and young Michael can just
stay out of all of them. If he suddenly thinks, oh,
she's a scorcher. No, you know what, I'm going to
go down and have a swim. He'll be turned away
at the turnstile. Oh, you opted out, you can't come in.

(05:29):
Would that work? I mean, there's a lot of things
people don't use that others do. Could they have a
bare bones rate structure or wouldn't be simply too too
difficult to implement. Once we get that little chip under
our skin, we'll be sweet. Can load up all sorts
of things on that. Just kidding. And at least in

(05:53):
Auckland you can see what you're paying for, and I
assume it's the same if you're in Hamilton or Timadoo
or New Plymouth. You can actually see the projects when
you're paying rates. In places like I know, for instance,
Vajo Kianga, we don't get rubbish collection. We don't have

(06:17):
water that comes from the sky.

Speaker 1 (06:21):
We have.

Speaker 2 (06:23):
Sewage that is collected on site and septic tanks, don't
have lighting, any pest control I'm doing. You know, you
don't get a lot for your three thousand dollars. So
at least in the cities you can see what you're getting.
There'd be some of you paying rates wondering what on
earth you're paying them for, so I'd be very interested

(06:45):
to hear your rates stories. Could you have would it
be too difficult to implement?

Speaker 1 (06:51):
It?

Speaker 2 (06:51):
Probably would, But would you like to see an option
you can have economy, business class or first class in
terms of what you pay for in rates and what
services you can access? Does a rates cap appeal to
you or can you see it just being a gradual
erosion of services and facilities? Oh eight hundred eighty ten eighty.

Speaker 1 (07:16):
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