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The Mapp Report: The Great Rates Debate

The Mapp Report

The Great Rates Debate

The North Shore City is setting a rate increase of 9.45 per cent. This is way above the inflation rate (3.3 per cent) or the growth rate (2.2 per cent for New Zealand, though slightly higher in the North Shore). If this pattern of rate increases continues in future years, the City council will be taking an ever-increasing share of the income and wealth of residents and businesses.

The City, of course, argues that it needs the extra money for transport and infrastructure (sewerage, waste water).

So is the Cities rate demand reasonable?

Clearly North Shore residents have high expectations for our city. We do want clean beaches, we do want better transport, including public transport (bus stations, shelters, better quality roadscapes), we do want more community amenities. All this costs money.

The question is what are we prepared to pay for? What choices are we prepared to make?

These questions are based on the assumption that everyone can readily afford the increasing rates. But this is clearly false. Superannuitants have only had a 3.2 per cent increase in their income in the last year. Clearly a ten per cent increase in rates will actually reduce their standard of living. In fact anyone whose income, whether a business or individual, has not gone up by ten per cent will effectively have their standard of living reduced.

The proponents of these rate increases will argue that the increase in public benefits (transport, community facilities, parks) will outweigh the loss of living standards of residents.

The real problem with this argument is that the proposed rate increase is not just a one-year special catch up. The City proposes at least a seven per cent increase for the next ten years – mostly for infrastructure requirements.

It is my view that the level of rate increases has to be moderated. Maybe the City and all the other local authorities need a rating formula, cost of living plus the cities economic growth will check the level of rate increase. This would ensure that as the city grows the rates will not take an ever-increasing share of the wealth. It does allow improvement in infrastructure. As the city grows the rates will keep pace with the growth.

The whole rates debate also raises the future of the city governance across the region. There is a group of concerned citizens, “Committee for Auckland”, who are taking a focused look at the future needs of the whole region. They have sought advice from leading City planners across the world.

A key recommendation is “One plan for Auckland” with the Rugby World Cup in 2011 providing a medium focus. The plan is all about building innovation, enhancing our role as a key Pacific Rim city, and integrated transport and infrastructure plans. This is the innovative thinking our city needs.

Political leaders, both central and local, need to take note of this imaginative thinking.

30 June 2006

Dr Wayne Mapp

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