What to do with an unspent $1m?

Dunedin mayor Dave Cull say he is committed to keeping rates within a self imposed 3% limit – about three times the inflation rate and after increasing rates in previous years.

ODT reports:

…it was signalled that $700,000 worth of extra costs discovered by council staff would make it tougher for the council to stick within the 3% limit.

But then:

Council group chief financial officer Grant McKenzie said the $1 million allocated in last year’s annual plan towards installing lights at University Oval…

…would make it easier to get rates lower? No, this is Dunedin.

…could be spent on one-off projects in the 2016-17 year, after the project was dropped.

What?

Mayor Dave Cull said having access to the funds was welcome and would allow the council to fund items the community indicated it wanted.

What about members of the community want escalating rates brought under control?

The spend mentality is one problem. So is Cull’s claim “the community indicated it wanted”? How does Cull know what “the community” want?

During feedback, submitters were positive about all areas of additional spending consulted on, Mr Cull said.

Did they choose more spending over reducing rates increases?

How many submitters? Some on the council have a habit of claiming that an active minority somehow represents everyone.

Like this today from Councillor Jinty McTavish:

It’s great to see Dunedinites calling for ANZ to follow the Council’s lead and divest from fossil fuels.

But ‘Dunedinites’ didn’t all feel the same way about the protest.

Stuff reports: Protesters blasted by passersby for blocking elderly customers from entering ANZ bank in Dunedin

More than 120 climate change protesters blocked entry to three ANZ bank branches in George Street.

Spokeswoman Niamh O’Flynn, of 350 Aotearoa, said the protest was targeting ANZ because the bank invested in, and supported, businesses that caused climate change through their activities.

Protest in a democracy. But obstructing people from going about their business isn’t as flash.

ANZProtestDunedin

Does councillor McTavish think that is good Dunedinite behaviour?

One passerby berated the protesters who refused to budge for an elderly woman wanting to use the bank.

“Come on you . . . . let the old lady in,” he said.

“Get out of the bloody way. You are doing your cause no good.”

Customer Jennifer Lee said she needed to use the bank, “and I had no choice but to take off my shoes and climb over them”.

Perhaps they are some of the same submitters who urge the council to spend more of other people’s money.

I asked Jinty how many Dunedinites thought obstructing other Dunedinites was great but she hasn’t responded yet.

Crone promises limit to rates rises

Auckland mayoral candidate Victoria Crone has pledged to limit rates rises to a maximum of 2% per year for the next three years (the latest increase under Len Brown’s council is 9.9%).

Crone announced this on her website: Getting the basics right for Auckland

Auckland Mayoral Candidate Vic Crone has announced her first set of policies, fiscally responsible commitments she says are fundamental basics of building a world class city.

The policies were jointly developed with Auckland Future and the announcement includes lifting council performance in four key areas: keeping residential rates low, cutting waste, reducing staff costs and controlling debt – essentials that council needs to get right.

“Last year ratepayers faced a 9.9 per cent average rates increase, for some it was a shocking 15 per cent. As Mayor I will cap average residential rates increases at 2 per cent per annum for the next three years,” says Ms Crone.

“If council isn’t being cost-effective, timely and smart with its spending, it’s downright outrageous to expect more from ratepayers.”

Vic Crone’s leadership will deliver at least $500 million in savings with a focus on reducing back-office waste, efficient procurement, cutting duplication and imposing a Mayor-led Line-Item Review programme.

As a start, Crone will reduce staff costs by 5-10 per cent over the next three years and cap staff numbers at current levels, saving up to $80 million.

“It’s concerning that every year for the last three years council has exceeded its staff cost budget line by over $50 million. I will put a stop to this trend while protecting frontline staff, core services and key capital investments.”

She says any additional operating surpluses will be prioritised toward paying down debt faster than forecast.

“I understand even with minor changes in interest rates, council could breach the 12 per cent interest payments to revenue cap under its current debt management strategy. I’ll ensure council is repaying debt above the current plan target and impose a review of this strategy to better protect Auckland’s interests,” Ms Crone says.

“I would like to acknowledge the Auckland Future candidates who worked together on developing this policy, and other centre-right Council candidates for their input.”

“Council can be a high-performing organisation that delivers real results for ratepayers and is ahead of the game. I have the strong leadership, fresh ideas and energy to get there and it starts by getting the basics in order.”

Link to Policy: https://drive.google.com/open?id=0Bxk_SbCo_sMkS3lNclpiV1R3cVU

It’s interesting that having been highly critical of Crone in a series of posts, including slamming her lack of policies, Whale Oil hasn’t posted on this policy announcement yet.

In contrast David Farrar posted at Kiwiblog: Some fiscal discipline for Auckland

So Victoria Crone and Auckland Future are pledging a maximum rates increase of 2% annually for the next three years.

Having rates go up massively end endlessly is a political choice. Len Brown and the current Council chose to increase rates by 9.9%.

This year Aucklanders should check out all candidates for Council and the Mayor, and ask if they have made a pledge on rates increases. If they won’t make a pledge, then don’t vote for them unless you want more further massive rates increases.

Pledging to limit rates rises is a start.

Actually limiting them when elected is a different matter, as Auckland has found out with Len Brown. NZ Herald in 2014:

Len Brown breaks election rates promise

Auckland Council’s budget committee has voted 16-7 for a proposal to increase rates by 3.5 per cent for each year of a new 10-year budget.

The proposal got the backing of Mayor Len Brown, who promised voters to hold rates at 2.5 per cent this term.

But as the Herald reported last July in Mayor Len Brown’s Auckland budget passes  the average household from last July was set at 9.9%.

Phil Goff’s website Mayor for a better Auckland is short on detail. His launch speech doesn’t mention any intent on rating levels and “A city that thrives on talent and enterprise – where talent and enterprise can thrive” is a confusing campaign sound bite.

John Palino’s Plan for Auckland is to reduce rates:

Auckland Council has increased rates far beyond the rate of inflation. Ratepayers have been treated as ATM machines that council can raid to fund any kind of spending. In the coming weeks and months John Palino will release fully costed, pragmatic policies designed to reduce Aucklanders’ rate burden.

John believes that Council needs to control spending. As mayor he will implement policies designed to prevent council from spending ratepayers money without regard to whether ratepayers can afford the spending.

Penny Bright seems to think that paying rates is voluntary, having not paid hers for several years.

Voters will have to judge the credibility and resolve of candidates on rates.

OCR down, mortgage rates down

The Official Cash Rate was dropped to 2.5% yesterday to the lowest rate ever, down from 2.75%. It is thought that this will be as low as it goes.

Mortgage rates also dropped again. Kiwibank has the best floating rate, reported to be 5.65% (their website still shows it at 5.99%).

Westpac currently offers the best fixed term rate special, 4.24%  for 2 years.

NZ Herald reports: Now’s the time to fix your home-loan rate, says expert

Homeowners are being urged to fix their mortgages now to make the most of record-low interest rates – which experts say are at rock bottom.

BNZ director of retail and marketing Craig Herbison said homeowners stood to miss out on years of savings if they didn’t take advantage of the lower rates, which had likely reached their plateau.

Loan Market mortgage adviser Bruce Patten said further cuts to the cash rate were unlikely and now was the time to fix.

“The message from the Reserve Bank was, ‘Don’t expect a cut next year’. Our advice to people in the last few weeks has been, ‘If you want certainty, now is the right time to fix’.”

Rates are close to half what they were a few years ago.

Homeowners should be looking to fix their mortgages for two or three years, he said. Rates for those terms were between 4.2 and 4.5 per cent a year – a big saving for people who might have fixed for one year 12 months ago, when one-year rates were around 6 per cent.

A homeowner with a $400,000 mortgage taken over 30 years could potentially save $372 a month, or $4464 a year, by fixing at 4.5 per cent, compared to 6 per cent.

So a $200,000 mortgage over 30 years could save abour $180 per month, about $2200 per year.

This will help many homeowners, but will also benefit people in business.

Presumably some dairy farm owners will be getting mortgage payment relief from lowering interest rates that will in part at least offset the low dairy prices.