Auckland Mayor proposes one-off rates increase of 5% to focus on ‘Covid rebuild’

Source: 1News

Auckland Mayor Phil Goff is proposing a one-off rates bump of about $36 per household next year to allow the city to “meet the challenges posed by Covid-19”. 

Auckland Mayor Phil Goff.

Dubbed the “Recovery Budget”, the 10-year budget wants to raise average general rates by 5 per cent for the 2021 financial year, which would represent $36 a year on a residential property valued at $1 million - the median house price in Auckland. 

Sales of "surplus properties" and an extended period of high borrowing are still also on the cards for Auckland Council.

Goff said he wanted to return to a 3.5 per cent rates increase per year for the financial year, starting 2022 to 2030. 

He said the proposal “focused on [Auckland’s] Covid rebuild”.

“While not all Aucklanders will be thrilled with a one-off rates bump of $36, it is a one-off measure that amounts to less than 70 cents a week for the average property,” he said.

“This increase will allow us to do more in transport infrastructure including addressing road safety, further drought-proof our city, continuing our response to climate change, protect our kauri trees and maintain our parks and sports fields.”

The rates bump would see the council maintain its $31 billion spending programme on infrastructure, Goff said. This is up from $26 billion set aside in the 2018 10-year budget, with spending increases proposed for transport, water and parks.

“While we face the impact of loss of revenue from Covid-19, it is important that we maintain investment in infrastructure to help the city recover from the current recession,” Goff said in his proposal.

“This not only stimulates the economy but creates valuable long-term assets for future generations.”

The proposal is also predicting the council’s debt-to-revenue ratio would stay above the 270 per cent limit set in its Financial Strategy for longer than expected.

Earlier in the Emergency Budget, it was predicted the ratio would return to the 270 per cent “sustainable” figure by June next year. 

Auckland Council temporarily allowed itself to borrow up to 290 per cent earlier this year in response to Covid-19 and Auckland’s drought. 

Goff said he wanted levels of borrowing to return to its current level after the first three years of the 10-year budget. 

Meanwhile, $191 million worth of Auckland Council properties have so far been approved for sale.

Goff said he supported a target of raising $70 million per annum for the next three years from asset sales or other commercial arrangements, like long-term leases. 

The plan is expected to go out for public consultation early next year.

It follows on from July’s “Emergency Budget”, which raised overall rates by 3.5 per cent to help plug the $1 billion in lost revenue over the next three years caused by the Covid-19 pandemic. 

Most submitters to the council’s consultation for the Emergency Budget said 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.

Auckland Council publishes a long-term 10-year budget every three-year term, with annual budgets published every intervening year.