It’s not uncommon for mayors and councils to play down rates rises. Like this:
Gwynn Compton: Spin cycle shrinks rates as well as clothes
But for Wellington City Council, an attempt to spin the merits of reducing a potential 7.1% rates rise down to 3.9% has ended up with an announcement that they’re reducing rates down to 3.9%, which would be a 96.1% cut!
In this case, the words “rise” or “increase” appear to have been omitted from the article.
In contrast, in the ODT today: Rates must rise to maintain momentum, mayor says
Dunedin faces a 7.3% rates rise as the Dunedin City Council eyes a decade of increased investment, but Mayor Dave Cull says it is essential for the city to keep riding a wave of activity.
Mr Cull was commenting before today’s start of public consultation on the council’s latest 10-year plan, which outlined proposed spending for the decade to 2028.
However that is a bit misleading too – the 7.3% rise is proposed for the first of ten years. More detail:
Rates would rise by 7.3% in the 2018-19 year,
by 5% the following year,
and by 4.5% each year
until 2027 when the increases would drop to 4%.
That amounts to about 60% over ten years.
Modest rates of $2000 would rise to $3190 after ten years.
| 2018 | 2,000.00 | |
| 2019 | 7.3% | 2,146.00 |
| 2020 | 5.0% | 2,253.30 |
| 2021 | 4.5% | 2,354.70 |
| 2022 | 4.5% | 2,460.66 |
| 2023 | 4.5% | 2,571.39 |
| 2024 | 4.5% | 2,687.10 |
| 2025 | 4.5% | 2,808.02 |
| 2026 | 4.5% | 2,934.38 |
| 2027 | 4.5% | 3,066.43 |
| 2028 | 4.0% | 3,189.09 |
And that is without any knowledge of future inflation, which would presumably add to the increases.
The council had come out of a period of austerity, during which rates increases were limited to 3% and spending was cut, as the focus shifted to driving core council debt down below $230 million.
Rates had still risen faster than inflation over the last ten years.
At the same time, core council debt – excluding companies – was forecast to climb from just over $200 million now to $285 million by 2028.
So debt is forecast to rise despite the large rates rises.
Not helping, from ODT at the same time: Tender troubles mean more delays for cycleway
Dunedin City Council staff have voiced frustration after a call for tenders to complete an Otago Peninsula safety improvement and shared pathway project came in $20 million over an already-inflated budget.
The council last year announced a revised budget to complete the project alongside Portobello Rd and Harington Point Rd, which rose from an estimated $20 million to $49 million.
This is not the first ‘shared pathway project’ (cycleway) where the costs have blown out.
So even with large rates rises there must be little confidence that the ‘increased investment’ wouldn’t increase substantially more.
This was Mayor Cull’s pledge last election:
In the six years I have led our Dunedin City Council we have reduced rate increases.
That’s much like the Wellington example above – rates increases were ‘reduced’ to above inflation.
I wonder how what he will pledge if he stands again in next year’s local body election.
