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Preparing for more rates increases

By Jem Traylen
Wellingtonians are facing more rate increases on top of a previously signalled 5.77% average for the next decade.

The council is proposing a significant hike of 13.53% this year and has said there will be much smaller increases in later years, averaging out at 5.77% during the next decade.

However Mayor Andy Foster confirmed in an interview last week that the 5.77% figure does not take into account a number of major unfunded projects that the council is seeking to progress – including the Let’s Get Wellington Moving transport initiative, a new sewage sludge processing plant and infrastructure for new housing developments.

When asked if the unbudgeted projects would add a bit on top of the 5.77%, Mayor Foster said “The answer is ‘Yes’.”

“This budget is about three things: it’s about investing in the infrastructure we need and obviously there’s a lot of that all at once. It’s about trying to keep the debt in reasonable shape so we’ve got headroom. It’s also about trying to manage the rates and I would describe the rates as more or less tolerable as opposed to very affordable,” said Foster.

As well as rates ending up higher than previously indicated, residents could be facing a stack of new levies and charges. These include a sludge levy, congestion charges, levies on long term parking, developer contributions and higher rates on properties that benefit from Let’s Get Wellington Moving.

The preferred option for a new sewage plant has a capital cost of $185 million and annual operating costs of $8 million.

The Mayor said that the council did not have an estimate for how much those costs would translate into an annual sludge levy, but I estimate it could be in the region of $200 per ratepayer.

However those costs will be dwarfed by the unbudgetted portion of Let’s Get Wellington Moving which is already running at around $1.2 billion and is expected to rise.

Asked if the consultation document could be clearer about the true cost to ratepayers and residents, Foster said “I’ve been very clear in every debate we’re having, we’re on a trajectory which will make rates more expensive as a proportion of household income.”

The budget is set out in the council’s Long-Term Plan (LTP) which is out for consultation from April 6.

Jem Traylen, a former government policy advisor, is now a post-graduate journalism student at Massey University in Wellington.

19 comments:

  1. Andrew, 26. March 2021, 22:15

    People focus on the percentage increase rather than their own dollar increase and the aggregate revenue.

    The average rates in Wellington are $3,080. A 15% increase is $8.88pw. That’s less than two coffees. What do you want? Water bursts in the streets, under-funded libraries, reduced parks, transport, community support, clean streets or two coffees?

     
  2. K, 27. March 2021, 10:38

    @Andrew: ask someone on a fixed income (retirees) if an extra $9 a week is no big deal on top of the last decade of large increases which have been increasing far faster than the increase in retiree superannuation, and the prospect of many more increases to come in future years.

    What’s worse is that, with interest rates at historic lows, the council is not taking the opportunity to borrow to fund these initiatives, which would equate to much lower rate rises as the interest costs would be minimal compared to paying upfront through rates instead.

    It’s also amazing the lack of explanation as to why rates are increased to fund many “one off” capital projects, but after these projects are completed the annual amount raised to pay for the project is then not reduced in future budgets, but instead simply assumed to be an ongoing council revenue source.

     
  3. Claire, 27. March 2021, 11:28

    I reckon the average rates in Wellington are higher than three grand. I have a small workingman’s cottage and my rates are $3600. Nor do I want the WCC’s incompetence over the years to add to that. I want it reduced and to be told how that will happen.

     
  4. Ray Chung, 27. March 2021, 12:51

    Claire, I agree. My rates are $5680, so Andrew is getting a bargain! I believe the percentage increase is important and relevant and Wellington has the highest increase in the country so why is that? Other cities including Auckland have water and infrastructure issues as well but their rate increases are below 6%. We continue to have councillors pushing their vanity projects despite the huge blowout. If the council was a business, it would never get away with these huge annual increases. We get some councillors saying the council is a huge business but they act as if it’s a gravy train with the ratepayers continuing to have to pay to ride on it.

     
  5. Conor, 27. March 2021, 13:09

    In Auckland, water rates are increasing at over 9% compounding every year for a decade. That’s how they’re hiding things.

     
  6. Toni, 27. March 2021, 17:39

    My rates are over $5,000 and living in the city I get very little for them. Failing infrastructure, sewerage pumping noise overnight whenever there is a problem, no central library, boarded up Civic Square, very little green space, pollution from the ghastly diesel buses, and pay for rubbish collection and water.

     
  7. Traveller, 27. March 2021, 18:09

    Our rates in Brooklyn (city council and regional council) have risen to $5300 this year. Three years ago we were paying $4850. And next year?

     
  8. Glen Smith, 28. March 2021, 21:08

    Traveller. The inflation rate over the last 3 years has been 1.60%, 1.62% and 1.71%. Compound adjusting the $4850 for this inflation gives $5093 in real terms. So you are paying around $2 per week extra now compared to 3 years ago – not even half a coffee.
    I agree with Andrew. Do people actually want to do without the things that rates pay for? Or do you want to get these from the private sector (then you would find out just what fantastic value rates actually are).
    It is unfortunate that we are facing a convergence of expenditure – either for things that are essential (eg the pipes, earthquake strengthening) or that will save more than they cost (eg transport infrastructure) but that is the reality. Do you expect a magic fairy to appear to pay for these things for you?
    Many people in the world have no access to water or sewerage or libraries or proper roads or parks or art centres etc etc. Here we have scoop readers who have become so self entitled that they whinge about paying an extra couple of dollars per week to maintain these privileges in life.

     
  9. Claire, 29. March 2021, 10:18

    Glen – at least if we were provided with the basics from the private sector they would be accountable. WCC took money earmarked for the pipes and used it for other things. So now they are saying let’s give a whopping rates rise to try and cover it. And we have to wait till next year to male them accountable.

     
  10. Ray Chung, 29. March 2021, 17:20

    Hi Glen, the big issue is where the WCC are wasting ratepayers’ money chasing vanity projects and not looking for efficiencies. You might be better to compare how other local authorities are handing these issues rather than compare us with countries that don’t have infrastructure and the facilities that you mentioned. The people in these countries wouldn’t be paying any rates or taxes either.

     
  11. Mike Mellor, 29. March 2021, 22:35

    A vanity project can be defined as “something to be done out of vanity, to show that they could do it”. Could anyone point out a current WCC project that meets that sort of definition?

    And according to the Taxpayers’ Union 2020 Ratepayers Report, the average Wellington City rates bill is $2,752. I’d say that that was very good value.

     
  12. Lance Lones, 30. March 2021, 9:40

    Hi Glen, Interesting that you should mention inflation – all things being equal, a well run council should be increasing rates roughly in line with inflation.
    Why is it that suddenly council services should cost significantly more in constant dollars? Are they suddenly providing new and better services? If they are, I sure don’t see them. If anything, we’re getting less value for money than before.
    Council has a monopoly on these services, and they’re behaving like a classic monopoly – the customer (us) has no choice, and is forced to pay whatever they see fit to charge us.

     
  13. Wellington Commuter, 31. March 2021, 10:43

    Regional Council Long Term Plan released for upcoming consultation:
    – rates increase is 12.64%
    – so a Wgtn City Avg House (valuation $803K) Regional Rates from $576.47 in 2020/21 will be $677.47 in 2021/22
    – Public consultation from 2 April to 2 May
    Regional Council rates percentage increase for the average residential property by city:
    Wellington City: 17.5%
    Hutt City: 7.5%
    Upper Hutt City: 11.5%
    Porirua City: 6.5%
    Kāpiti Coast District excl Ōtaki: 16.8%
    Masterton District: 28.9%
    Carterton District: 19.3%
    South Wairarapa: 19.4%
    [via twitter]

     
  14. Casey, 31. March 2021, 11:12

    Glen Smith and Andrew both compare rates increases to cups of coffee, which I suppose indicates that both have disposable income to indulge in such. Others measure rates increases in the essential things they need to cut back on, as they have no option but to pay their rates. Try living on a single pension out of which, on average, 15% goes in rates alone. For those who were careful with saving for retirement and who relied on bank interest to supplement their pension, that source has virtually dried up.

    An often repeated retort from my ward councillor in relation to increases in rates and other WCC charges, was “it is only x cups of coffee per week”. Had I not had the extra to pay to the WCC and spent the money of coffee instead I would now have serious health issues as well as a depleted retirement savings fund.

    Funding the essential infrastructure is a given, funding frivolities such as the white elephant convention centre is not what councils ought to be doing.

     
  15. Claire, 31. March 2021, 11:42

    So that’s two vanity projects – the parklets (except the one in Newtown is closed now deemed unsafe) and the convention centre. Any more?

     
  16. John, 31. March 2021, 11:50

    A lot of talk of the rates burden on people on fixed incomes. But these people do own their homes. They do have the option of liberating equity from that home to pay rates (i.e. pay for services). Renters have no such option.

     
  17. Mike Mellor, 31. March 2021, 12:39

    Claire, neither the parklets nor the convention centre fit any definition of what a vanity project is – they both have clear reasoning behind them, nothing at all to do with vanity. There are good reasons for disagreeing with these projects (as there are for many projects), but being vanity projects is not one of them!

     
  18. Dog biscuit, 31. March 2021, 13:59

    John if someone has to take out a mortgage to pay their rates then something is seriously wrong with the system.

     
  19. Ray Chung, 3. April 2021, 13:51

    Hi Mike Mellor, when it comes to defining “vanity projects” I accept that this may mean different things to different people. I’d define a “vanity project” as one that isn’t absolutely necessary to the efficient running of Wellington and I concede that this definition may also be contentious. I consider that with the city’s pipes and infrastructure needing so much investment that every project that isn’t going to replace and repair this infrastructure falls into my definition of a “vanity project!” I consider we should stop spending on any of these until we can afford them.

     

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