Mayor drives $1.7 billion in reduced costs

The Mayor is confident that Auckland Council will hold average rate increases to around the rate of inflation after driving $1.7 billion out of the draft Long-term Plan (LTP) despite pressures on council budgets.

“As expected, there have been strong views from the community on many aspects of the Long-term Plan – so we have listened, proposed appropriate changes and delivered large cuts to non-essential services and projects,” says Len Brown.

“I am holding to an increase of 3.6 per cent for the 2012/13 year while maintaining current council service levels, responding to residents views and staying true to the vision for our city.”

To accommodate changes to the draft LTP, Auckland Council has proposed savings totalling $1.7 billion while remaining committed to key projects such as fixing Auckland’s transport problems, delivering on economic growth for our region and upgrading sports fields.

“A real focus here has to be jobs. To become the world’s most liveable city, Auckland has to become an economic powerhouse.

“The City Rail Link continues to be our priority in terms on unleashing the potential of Auckland. In terms of the LTP, the project will not have any effect on rates for the rest of this decade.”   

The greatest number of LTP submissions on any given issue was against the proposed dog registrations and fees policy. Auckland Council has already responded to this by keeping fees and charges to inflation-adjusted levels for the next financial year, despite a $3.5 million impact on general rates.

Just over a thousand submitters felt the proposal for a Uniform Annual General Charge (UAGC) of $350 was too low, many of them suggesting setting it as high as $750. Charging a UAGC ensures that every ratepayer makes a minimum contribution to council services – increasing the charges directly correlates to increasing rates on lower income households.

“Increasing the UAGC would actually make a greater number of ratepayers worse off. There are already enough changes to the rating system outside of our control, like the move to capital value and the even distribution of rates, which will already stretch households – increasing the UAGC would make things even harder.”

There were also a small number of submissions on the proposed business rates differential. This has been set at the same level as paid under the former councils and, under the proposal, will reduce annually by a factor of 0.1 over the remaining years of the LTP from a starting differential of 2.63.

Strategy and Finance Committee Chair Penny Webster says council has followed a course that is fair and equitable to ratepayers across Auckland, whether they are residential or business. “In my view, the percentage of Auckland rates paid by business should remain unchanged. What's more, business has our commitment that the rates differential will drop each and every year during the period of this Long-term Plan.”

In addition, Auckland Council is continuing to work with the government to develop a transition policy that will mitigate the impact of moving to a single rating system. The council’s preferred transition proposal put forward in the LTP received overwhelming support from submitters. Discussions with the government are ongoing, but the Mayor is confident of a successful outcome.

The Mayor has also asked the government to consider expanding the qualification requirements for a rates rebate. "I’m focussed on ensuring that it’s easier to apply for and Aucklanders are properly supported by the scheme. I would also like to see the eligibility for rebates widened by the government," says Len Brown.

 

Auckland Council Long-term Plan

Fact sheet

 

This document outlines the main changes being proposed to council following submissions on the draft Long-term Plan.

 

Overview

 

       Auckland Council is proposing an overall rate increase of 3.6 per cent.

 

       While maintaining the projected increase, around the council rate of inflation, the council has retained existing service levels and identified organisational efficiencies.

 

       The council’s focus is on investing in projects which will transform Auckland and its communities, fix Auckland’s transport problems, stimulate the local economy and create jobs for Aucklanders.

 

Listening to Aucklanders

 

       Aucklanders have had significant input in the Long-term Plan 2012 – 2022 (LTP), making around 10,000 submissions on the draft plan, covering some 50,000 submission points.

 

       Key issues raised by submitters included dog registrations, transport strategy and public transport, general rates and rating policy, wastewater tariffs and  the City Rail Link

 

       Overwhelming response on the issue of dog registrations saw the council maintain existing fee levels with an increase of 3.3 per cent. However, pursuing this policy means an extra $3.5 million of animal management fees is now included in the base rate shared by all Aucklanders.

 

Minimising the impact of change

 

       As required by government legislation, Auckland Council must introduce a region-wide rating policy, based on capital value. Moving to a region-wide policy will have a significant impact on ratepayers in some former council areas.

 

       Moving to a single system, where everyone’s rates are calculated the same way, is fairer for all Aucklanders. A single system will replace a range of uneven and inconsistent calculation methods previously used across the region.

 

       The council is working closely with the government to develop a transition policy to ensure the change to a single rating system is as fair as possible and mitigate the impact on those most affected.

 

       This would result in changes in residential rates capped at 10 per cent, and changes in business rates phased in, both over three years.

 

       This would benefit the approximately 189,000 residential ratepayers who would have incurred rate increases of more than 10 per cent in 2012/13 under the remission transition policy proposed in the LTP.

 

       For commercial ratepayers, both small and large business, approximately 14,000 would have incurred rate increases of more than in 2012/13 under the remission transition policy proposed in the LTP.

 

Charging mechanisms

 

       Auckland Council proposes a Uniform Annual General Charge (UAGC) at $350 per annum as the fairest level.

o        Charging a UAGC ensures every ratepayer makes a minimum contribution towards council services.

o        The higher the UAGC, the more Auckland households will receive rates increases above 10 per cent.

o        A level of $350 strikes a balance between minimising change across the board and supporting those least able to afford that change.

       Auckland Council has proposed charging UAGCs on Separately Used or Inhabited Parts of property (SUIPs) for properties in the former Manukau and Franklin district council areas, to bring them in line with the rest of the region.

o        A SUIP identifies properties that have multiple units on them, such as a shop that has a flat above, or a house with a granny flat. Charging per SUIP better reflects the level of development on a property and treats similar units the same whether they are on a separate title or not.

o        The alternative to this is charging per rating unit. To do this would mean an additional $22 million spread across all Auckland ratepayers.

 

Working with the government

 

       Council has requested that government make a minor change in the legislation to facilitate its rates transition policy.

 

       The Mayor has also written to the Minister of Local Government requesting assistance with the rates rebate scheme. Len Brown would like to see the scheme made more accessible to those entitled to it and extended to people living in ‘licence to occupy’ situations in retirement homes.

 

       Until the government conducts a review of the rates rebate scheme, Auckland Council is looking at a rates remission policy or grant schemes as short-term solutions for affectedAucklanders.

Businesses

 

       The move to a region-wide rating policy also affects Auckland businesses. The former councils had a range of business differentials with the lowest in the former Franklin District Council area.

 

       A business differential is a multiplier of the residential rate, excluding the UAGC, for properties of equivalent value.

 

       The proposed Auckland business differential is 2.63. This means the overall proportion of rates paid by the business community will remain the same in the 2012/13 year as paid under the former councils. The differential will then reduce by a factor of 0.1 each year for the remaining nine years in recognition of the ongoing need to support and stimulate the Auckland economy.

 

o        The former Franklin District Council applied a very low business differential,  which means Franklin businesses face significant increases, in many cases more than 50 per cent.

o        Auckland Council is proposing a transition policy for businesses in the former Franklin District Council area to mitigate this. 

Financial prudence

 

       Auckland Council continues to identify efficiencies and pursue financial prudence. This includes action such as:

o        The Mayor instructed Waterfront Auckland to identify significant savings in its $25 million proposal to develop a cruise terminal on Queens Wharf. As a result, for an additional capital investment of only $2.3 million in the LTP, Auckland will see Shed 10 transformed into a $14.6 million world class multi-use cruise terminal and events facility.

o        The Mayor is asking the Watercare board to look for efficiency savings to avoid raising the wastewater tariff from the price indicated in the draft LTP.

o        An alternative approach to the superyacht refit project, costing $7million, has been identified which delivers significant economic benefit and sees this project reclassified as a commercial initiative with no direct impact on the ratepayer.

 

Key projects

 

       Focus on jobs:

o        Projects such as the planned Wynyard Quarter Innovation Precinct, the Shed 10 cruise ship terminal, and the superyacht refit facility focus on enabling the private sector to provide more jobs for Aucklanders and to bring more money into the local economy.

 

       Focus on transport:

o        The Central Rail Link is the key transformational transport project for Auckland, which will realise the full potential of the region’s rail network, allow quicker and more frequent rail services and free up the roads for vital freight and commercial traffic.

o        The CRL will not have any impact on the Auckland ratepayer before 2020. Removing it from the Long-term Plan 2012-2022 would see no reduction in rates in the first 8 years of the plan.

 

       Focus on recreation and wellbeing:

o        Auckland Council will consider four options for charges at Auckland council-owned swimming pools. These include:

       Option 1: The status quo, with continued free access at Manukau pools, and continued charging at pools in other areas across the region

       Option 2: Universal free access during standard opening hours

       Option 3: Universal free access for children 16 years and under

       Option 4: Universal user charges

 

o        Auckland Council has a 10-year, regionwide sports field upgrade and development programme to provide more sports fields and to make them available more often. This proposed $200 million investment in sports fields means up to 3000 more hours of playing and training time will be available by 2021.