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Goff: Vote for me and higher rates

Phil Goff has a novel platform for his campaign to hold onto the Auckland mayoralty - vote for me and your rates will rise by 3.5 percent a year.

It is a big call, with inflation running at just 1.9 percent and with anything over 3 percent in the long-term being frowned upon under the Reserve Bank's mandate.

Goff claims he kept his first-term promise of an average rates rise of 2.5 percent a year, but on top of that base rate increase, Aucklanders copped a range of other, higher, specific charges for water and conservation and a regional fuel tax of 11.5 cents a litre, which meant the total take from the public grew by substantially more.

Being honest about the need for that base increase to rise to 3.5 percent a year has merit, but the record of New Zealand voters rewarding promises of higher charges for public services is not great.

Indeed when Goff was Leader of the Opposition, his Labour Party campaigned at the 2011 general election for an increase in the top tax rate from 33 to 39 percent and the introduction of a capital gains tax. The result - for reasons admittedly well beyond those two imposts - was a party polling at just 27 percent on election day. Goff resigned the leadership soon after.

Anyone living in Auckland knows the place needs substantial investment for transport, the environment, housing infrastructure and coping with population and tourism growth. The Auckland Council finds itself limited in its ability to borrow money to fund such needs, despite an era of historically low interest rates, because its current debt is lapping at the limit set for it by global credit rating agencies.

Goff obviously does not want to limit himself to that 2.5 percent promise of 2016, knowing the council will need more and its easiest source of cash is the vast rating base, where he calculates a little extra across a high number of householders (the actual extra dollar numbers aren't huge) will be politically achievable. 

The risk is that his leading publicly-declared opponent, fellow former Labour cabinet minister John Tamihere, who is already targeting supposedly wasteful council spending, can use the higher charges to paint Goff and the bureaucracy as lax on cost control and free with their demands on ratepayers.

Tamihere is promising root and branch reform to eliminate costs, particularly in bodies such as Auckland Transport. The political contrast will be between 'Aucklanders, we'll cut our cloth to suit' and 'Aucklanders, we need you to pay for more cloth.'

John Palino, a centre-right figure standing for mayor for the third time, immediately zeroed in on Goff's planned rates increase, saying "a major percentage of the revenue the mayor got from increasing rates" in the first term had gone on adding 200 more officials to 10,000 it already had and further rates rises would be used to "bloat bureaucracy".

Goff has not taken the decision to stand again lightly, giving careful consideration to family and health considerations (he had a heart attack early last year). He says: "I have not and will not give this city anything less than 150 percent of my time, energy and commitment. Having started the job, I want to see it through."

Tamihere claims Goff is a "reluctant" candidate and the challenger raised the stakes on that 150 percent commitment by promising to serve three full terms if elected.

It could be a sign of Goff's confidence, or over-confidence, that in 2019 he is prepared to ask for more in rates than he did in 2016.

It has not been easy to keep general rates rises to 2.5 percent. When the council finalised each year's rates bill the self-imposed limit sat uncomfortably across the long list of spending needs identified by officials and local boards. The 3.5 percent average rise won't cover all those needs but will provide the council with a little more flexibility.

The backroom boffins cutting and trimming current programmes must despair of big cost blowouts in projects such as the City Rail Link - believed to be needing a further $500m in spending to a total cost of close to $4 billion  - and now a $100m cost to prop-up Eden Park, a stadium surely not much longer of this world.

As mayor, Goff's office sets the broad parameters for the council budget. His announcement speech said: "We have broadened our revenue base while keeping average general rates rises lower than any other growth city in New Zealand. We have saved ratepayers hundreds of millions of dollars through value for money exercises and achieving efficiency at council. And we will continue to find the savings and value for money."

On the new campaign figure of 3.5 percent average rates rises, drawn from the council's 10 year-plan, his financial advisers have seemingly overwhelmed anyone on the inside advocating political caution in an election campaign with a well-known populist such as Tamihere.

It has given Tamihere an opening. Is he good enough to seize it?

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