Auckland’s councillors today have endorsed an overall rates increase of 3.5 per cent as part of its “emergency budget” responding to Covid-19.
That’s despite most submitters to the council’s consultation of the budget saying they preferred a rates increase of 2.5 per cent or less. Only 28 per cent opted for a 3.5 per cent rates increase, and 25 per cent wanted a zero increase.
However, a zero increase wasn’t being considered by the council’s governing body due to its severe impact on council services and investment in transport, parks and community projects.
The 3.5 per cent option was finalised today and voted by 18 of the 21 of the councillors aimed to plug some of Auckland Council’s $750 million fiscal hole following the pandemic.
Councillors Greg Sayers, Chris Fletcher and John Watson voted against the 3.5 per cent rates increase.
"It's the compounding effect on Aucklanders, particularly the most vulnerable," Mr Sayers said.
He said ratepayers were already burdened with fuel taxes and water charges.
Meanwhile, household rates are set to increase between 4.3 to 4.45 per cent. This was due to a long-term move to lowering business rates and rising waste management costs in various parts of Auckland. Water bills are also set to increase.
Mayor Phil Goff said he didn’t expect at the time Aucklanders were consulted that Council would need an additional $224 million for the city’s water infrastructure. He said the spending aimed to reduce the risk of severe water restrictions in future as forecasts were predicting a dry spring and summer.
Libraries also received $450,000 to ensure it could continue to operate at full hours.
Waka Kotahi NZ Transport Agency would be contributing $40 million on road safety and public transport in Auckland until December.
Mr Goff said he recognised people would be suffering as a result of Covid-19, and set aside $50 million for rates relief and suspended the targeted rate on visitor accommodation.
“To compensate for the half-billion dollar lost, we would have had to have raised rates by 28 per cent. That was never a consideration by us,” he told reporters this afternoon.
He said 600 temporary staff had already lost their jobs, and the equivalent of 500 full-time permanent staff would go.
“That is incredibly tough, and that also affects our ability to deliver services in the way we wanted to.”
He said voluntary pay cuts of 10 to 20 per cent were also already in place among staff and councillors. Mr Goff himself took a 20 per cent voluntary pay cut.
Mr Goff said the city was set to spend $2.7 billion on infrastructure this year, a big increase from the average of $1.6 billion over the past five years.
“We have trimmed it back, but we will still spend, including on the Watercare projects, $2.5 billion this year.
“The easy answer would have been to slash our infrastructure spending. We decided not to do that … we have a pressing need to get that infrastructure done.”
He said the best time to build was when the community was heading into recession so the construction industry would have a pipeline of work.
The mayor told councillors this afternoon that the pandemic “has had a huge impact on our city and the revenue of this council”.
“There are no soft options left … we did look at all options,” he said.
“Borrowing wasn’t the simple answer, so we had to look at cutting.”
He said the council had already looked at cutting about $200 million in expenditure this year as it looked to a “smaller” and “leaner” operation “in the difficult economic times we find ourselves in”.
“This has been an effort we’ve applied ourselves constructively and collaboratively. I think it’s the best process I’ve seen [on council].”
Mr Goff said all local boards unanimously supported the 3.5 per cent rates rise indicated in 2018, as had most of the councillors in workshop sessions.
Councillor Desley Simpson, the chair of council's finance and performance committee, said the budget "is not perfect".
"But we don't live in a perfect world. Covid-19 is not over."
She said local boards had lost a lot of money because of the budget. So, she said she felt she had no choice but to back the 3.5 per cent rates increase.
"I know it's painful. It's painful for everyone."