Aucklanders to pay billions for city growth

Auckland Mayor Phil Goff is sending the city's residents a draft bill for billions of dollars to pay for growth over the next 10 years - and is promising to pursue the government for the return to Auckland of GST paid on rates in the region to help meet the cost.

Goff's first 10-year budget asks for a new regional fuel tax of 11.5c a litre to raise $135 million a year, two new 'targeted' charges on ratepayers to fund water quality and environmental conservation efforts, and a 2.5 percent rates rise for the next two years, rising to 3.5 percent annually for the eight years to follow.

The mayor also wants Airbnb and other online accommodation providers in residential homes to be charged higher, business rates if they pass certain usage rates. And he believes asset sales of the Downtown Carpark building and another council office block in Graham St could raise hundreds of millions of dollars more.

In a seemingly small-ticket item on the agenda, the council will consider disbanding its Auckland Council Investments Ltd company, saving just $1 million a year, and putting its big shareholdings in Auckland International Airport Ltd and Ports of Auckland Ltd under direct control of the "council parent."

Goff's budget proposal notes, tellingly: "Other benefits include.... likely easier execution of any future port decisions, and a better understanding of the port's business" by councillors.

He advocates a memorandum of understanding between the council and the port company to protect from "undue political interference."

Auckland councillors considered the overall 10-year budget proposal yesterday and will get more details in the next fortnight before putting it out to public consultation.

Goff told the council meeting he would also pursue the central government for a return of GST to the region to help cover the billions of dollars in costs Auckland faces for infrastructure developments. "It is something I would continue to talk up with the government," he said, but added he had yet to have any encouragement from the former or current government that the idea is on their agenda.

"Government currently charges 15 percent GST on council rates, pushing up the cost of rates, but then retains that revenue. In Auckland's case, the revenue is around $240m a year. If returned to Auckland it would enable us to meet more of our own infrastructure costs without going cap-in-hand to government."

It was a way of Auckland covering more of its own costs and "I will continue to push that."

Both Goff and a councillor, Development Committee chair Chris Darby, also pointed to possible changes to rating legislation which could let the council charge rates on some currently exempt properties. The mayor said: "Payment of rates on government-owned property in Auckland, currently exempt, would add around $40m to the council's income."

Darby favoured a review that would allow the council to rate, for example, the wharves on the Port of Auckland and the runway at Auckland airport "and hospitals and other Crown properties".

"We have been under-investing for years in the infrastructure that Auckland needs and we are now starting to pay the price for that," Goff said. "Under this budget we will be spending at least $5 billion more for infrastructure in the next 10 years than the council had budgeted to spend in the last 10-year plan, three years ago."

His proposal lists transport spending to rise by between $3 and $4b over the decade 2018-2028, and water projects by $1.5b.  

General rate rises

By keeping the general rate increase next year and the year after to 2.5 percent, Goff manages to keep his campaign promise for the duration of his first term. He would go to the polls next time, however, with eight years of 3.5 percent increases locked and loaded in his 10-year budget. He said: "The increases of 3.5 percent from 2020/21 are necessary to ensure prudent fiscal management, to meet Auckland Council's substantial infrastructure investment, particularly the City Rail Link."

Regional Fuel Tax

Goff wants road users to pay more of the funding needed to develop roads and alternative public transport that reduces congestion on roads. He repeatedly said a pensioner in South Auckland who seldom drove was currently paying as much under the Council's Interim Transport Levy ($114 a year) as a transport company with a fleet of trucks operating seven days a week. He told the meeting the $1.3 billion over 10 years from the tax, would be used on projects across Auckland, not just on one or two developments, and all money would be spent on transport.  

Chris Darby said the council should view the regional fuel tax as interim, as well, because within the decade the growth in electric and then autonomous vehicles would mean the amount of money being spent on fuel, and therefore available through a tax, would reduce. "Then we need a dynamic congestion pricing system. I want us to work hardest at that, not just to think 'We've got a regional fuel tax in place. We can't rest easy in trying to finance a 21st century city.  And we have got to wean ourselves off that general rating tool."

Targeted water quality rate

The mayor wants to speed up the upgrade of Auckland's water infrastructure to reduce waste water overflows from a 30 year programme to one that could be completed in the next decade. The aim is to cut overflows that lead to polluted beaches and harbours by 80 percent. His proposed extra rate would be about $66 a year for the average residential property valued at $1.08m.

Targeted environmental protection levy

This would raise between $123m (at a low charge of $21 per average ratepayer) and $356m if the public consultation supports an "enhanced protection and restoration package" of $60 a year to put in an extra $84m to fight Kauri dieback in areas such as the Waitakere Ranges, and for pest control and marine biosecurity.

A councillor, Greg Sayers, put it to Goff that the combined effect of the general and targeted rates and the fuel tax could be the equivalent of a rates rise of 6.2 percent, but the mayor rejected that, saying the fuel tax was a user-pays charge and the rate increase would be 1.4 percent for the average residential property valued at $1m. "The two targeted rates are absolutely transparent to enable ratepayers to see what they are paying for and where the rates go."

There is a cost, however, of keeping rates down. Councillor Alf Filipaina wanted officials to explain what effect keeping general rate increases at 2.5 percent would have cumulatively, noting $15m was cut from budgets to achieve that rate figure for the present year. "What could potentially be removed?"

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