MEDIA RELEASE 25 October 2012

[Statement from David Thornton]

Mayor Brown’s 2.9% rates increase will be between 5%-10% for one in three ratepayers.

Increasing debt the real threat to level of future rates increases.

Ratepayers in Auckland supercity can look forward to a lower rates increase next year, but that will be little comfort to the 169,061 ratepayers who are facing increases of between 5% and 10% - that is 37% of all ratepayers

Ratepayers will contrast that 2.9% increase against the domestic rate of inflation [CPI] which is now just under one percent [0.8%].

The Council claims that the rate of inflation on council expenditure is currently 3.3% - largely reflecting cost increases in the construction industry.

Mayor Brown claims his proposal for a 2.9% rates increases is achievable, and he cites a number of examples of cost savings right across the council’s range of activities.

The Mayor is calling for reductions in some service levels and in the use of external consultants.

Ratepayers will welcome many of these cost cutting measures, but will also be apprehensive about the Mayor’s stated intention not to ‘re-litigate’ major projects which are the cause of the ever-increasing debt load which has been placed on ratepayers backs over the first two years of the Auckland Council.

The interest on that debt is already forecast to amount to 25% of rate revenue by 2020 – or maybe earlier.

Ratepayers are astute enough to realise that Increasing interest payments will lead to reduction in expenditure on the council’s other activities, or substantial rates increases in future years.

Also troubling news for ratepayers are the latest figures from Auckland Transport showing a significant reduction in rail passengers, the effect of which will be an increase in passenger subsidies, largely paid for out of rates.

While the Mayor may expect praise for his proposals to limit increases, there will be some scepticism due to the fact that next year is election year for the Mayor and Council.

ENDS

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