MEDIA RELEASE

1 March 2004

2.1 per cent rates rise tipped for Auckland City

For the third year the Auckland City Council intends to hold its rates increase to within the level of inflation.

"We have again asked council officers to explore options for holding rates constant in real terms," said Councillor Douglas Armstrong, chair of the council's Finance and Corporate Business Committee.

"I expect the council to vote for a 2.1 per cent increase for 2004-2005 at our Combined Committees meeting next week. This amounts to an extra $52 per ratepayer and would probably be achieved through an increase in the Uniform Annual General Charge (UAGC) and waste collection targeted rate. I fully expect this will once again be one of the lowest rate increases in the country.

"This council does intend to continue with the long-standing policy to reduce the loading put on business rates. We're fortunate in Auckland city that we have such a large business base. Because businesses pay a higher rate in the dollar they effectively subsidise residential ratepayers.

"Successive Auckland City councils have realised our rating policy must reduce the burden on our businesses to encourage economic growth in the city. At the same time, we have also asked officers to investigate ways to speed up the impressive central business district upgrade, possibly via targeted rates for those who would benefit most that is businesses and residents in the CBD," said Mr Armstrong.

Auckland City collected 99 per cent of its rates in the 2002-2003 financial year and to date has received 96.5 per cent of instalments for this financial year. Once again this year the Auckland Regional Council (ARC) will collect its rates separately to the city council.

The council's director of finance, David Rankin, says the February policy paper contains a range of rating policy issues and models, many of which were first raised in November last year at the time of the Annual Plan Direction Setting meeting.

At the request of councillors, council officers have undertaken further policy work and made recommendations that the council may choose to adopt, reject or modify.

"The paper makes recommendations while presenting options for every decision," said Mr Rankin. "The council has an intensive programme of activities planned for 2004-2005 but we have managed to develop rating options which keep the recommended increase to within the level of inflation, in line with this council's policy."

2.1 per cent increase funded by $52 increase in set charges

Council officers' recommendations following direction from councillors:

- that the general rate increase by 2.1 per cent (in line with inflation). This would be achieved by increasing the waste collection targeted rate by $19 (to $129 per property) and the UAGC by $33 (to $183 per property).

The general rate is based on the annual value of the property.

The UAGC is the minimum contribution all ratepayers make to the city for general services that all ratepayers use such as footpaths and parks.

The $19 waste collection increase will cover the total cost of providing the service, including the inorganic collection every two years. To date, this rate has only covered only part of the full waste collection cost to council. The remainder of the cost of providing the service has been funded out of the general rate.

Rating differential strategy continues but on a revised path

Last year the council asked officers to pause the differential strategy, which aims to reduce the rates burden on businesses. This was in order to mitigate the impact on residential ratepayers of last year's property revaluation and introduction of uniform charges.

Because the existing differential strategy did not address the implications of uniform charges, council officers recommended a review of the strategy this year.

Council officers' recommendations following direction from councillors:

- continue policy of reducing the loading put on business rates (the rating differential) but revise differential strategy to accommodate changes to UAGC

- move towards no distinction between rates paid by CBD and other businesses

- period of the strategy be extended from five to nine years to minimise any additional rates burden on residential ratepayers.

New CBD targeted rate to speed CBD upgrade programme

Council officers' recommendations following direction from councillors:

- that the council channel the savings from the reduction in the business differential for CBD businesses into a new targeted rate and

- that the same rate applies to CBD residents, equating to a charge of $80 on average per household.

"The council has allocated around $35 million over 10 years out of general rates to fund a significant upgrade of the CBD," said Mr Rankin. "The proposed targeted rate would transform the CBD at a dramatically faster pace and places a fairer burden on those who will benefit most from the upgrade."

Waiheke rate for upgrade of the transfer station

The Waiheke Island transfer station requires a significant upgrade to meet environmental standards.

Council officers' recommendations following direction from councillors:

- in line with this council's policy on refuse charges, that a new targeted rate of $49 be introduced for Waiheke residents instead of absorbing the upgrade costs into the general rate. The remainder to be funded through increased gate charges and an increase in the additional refuse bag charge.

After councillors review and discuss the rating policy paper at the Combined Committees meeting from 10-12 March it will be included in the council's Long Term Council Community Plan (Focus on the Future 2004 - 2014). This document will be available for public consultation from April 22 to May 21 2004 at www.aucklandcity.govt.nz/focusonthefuture

Ends

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