Statement by North Shore City Mayor George Wood

Wood supports independent rates inquiry August 23, 2006

North Shore City Mayor George Wood is delighted by the Government’s announcement of an independent inquiry into local government funding.

Mr Wood says the full inquiry is a far better option than a parliamentary select committee review as long as the terms of reference are wide-reaching enough to address the community’s concerns regarding rating, user charges and development contributions.

“This is good news,” says the third-term mayor of New Zealand’s fourth largest city which is budgeting to invest $1.7 billion over the next 10 years on (capital) infrastructural programmes.

“The inquiry must take more than just a cursory look at the wide range of issues, including addressing affordability and people’s ability to pay.

“I certainly would approach this in a positive manner and know that my fellow councillors who share my concerns about the impact that rates have on our citizens, especially those on low and fixed incomes, would co-operate fully with an inquiry,” he says.

“The inquiry team must come to Auckland to hear from the seven local councils and regional council that represent nearly a third of New Zealand’s population.

“The Auckland region must come together and prepare a detailed assessment of the projected funding needed for the short and long term.

“Aucklanders need certainty that the Government will commit to providing long term funding to Auckland so that there will be a clear way forward, showing who is to contribute which parts of the various budgets.

“We also need to sharpen our pencils and work together as a region to finding greater efficiencies and savings by looking at the ways we do our business.”

Mayor Wood and the North Shore City Council have, like most other local authorities, been asked to explain why rates are rising above the level of inflation.

While some ratepayers accept that greater investment is needed to catch up after years of neglect and lack of foresight, others will not accept that the blunt funding tool that is property rates is fair. Similarly, many large scale property developers are fighting against contributing towards the costs of growth-related infrastructure.

George Wood says his council is seeking to balance the pressures to hold rate increases with ever-increasing community expectations and legal obligations.

“The main reason for our level of rates increases is the capital programme required over the ten years to provide the service that ratepayers have requested through various consultation processes.

“Each $10 million of loan-funded capital expenditure adds slightly less than 1 per cent to the average rates bill.

“In this year (2006/07), there is $87 million of loan-funded capital work requiring an 8.1 per cent increase to cover the extra interest, loan repayments, and depreciation and operating costs of the new assets after allowing for the increased rates collected from new properties. “Inflation has been approximately 4 per cent over the last 12 months and this adds an extra $5.8m to our operating costs and an extra $3.7m to our revenue. The net effect is a 1.6 per cent rates increase.

“This adds up to a 9.7 per cent rates increase, however we’ve increased rates by an average of 9.5 per cent by savings in operating costs through efficiencies and procurement negotiation.“

ENDS

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