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Costs For Council Services The ‘Reality’ Behind Rates Increases

Hamilton City Council’s proposed Long-Term Plan budget prioritises the services residents and businesses receive now, paid for by a rates increase to cover the increasing costs to deliver these.

Council has revealed the first cut of its 2024-34 budget and work programme, and the forecast impact that international drivers such as rising inflation and interest rates will have on its operations.

The biggest cost increase Council is facing in 2024/25 is depreciation ($19 million), alongside $18 million from interest rates, and $17 million from inflation impacts across all services the city receives.

The depreciation figure represents how much more it will cost Council in 2024/25 to look after the city’s infrastructure. Council is responsible for 200 sports grounds, nearly 700km of roads, 1250km of pipes carrying drinking water from the treatment plant, 688km of stormwater pipes, 83 play spaces – as well as thousands of other assets.

Costs are going up to look after these, and the number of assets Council owns is growing. In 2022/23, Council was handed over an additional $60 million in infrastructure as a result of private development around the city.

Hamilton Mayor Paula Southgate said: “We must look after our city, keeping current assets in good order and keeping good levels of service to the community. I am not prepared to see the city decline.”

To absorb some of the cost increases, Council is reducing its spending to deliver services more efficiently. Initiatives to save $7 million in operating costs in 2024/25 have already been rolled out, and Council’s capital programme has been trimmed by 14% across the first three years.

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Council’s current revenue, with the rates increases of the previous Long-Term Plan, is not sufficient to cover the city’s costs. This means debt is being used to pay for everyday costs – the equivalent of a household using the credit card to pay for groceries.

To keep pace, the proposed budget favours an approach that will see Council ‘balance its books’ – have everyday costs being met by everyday revenue – in three years.

To achieve this, a median value property would pay an additional $9 per week in rates in 2024/25.

Chief Executive Lance Vervoort said Hamilton’s rates have historically been lower than all other major cities and neighbouring towns.

“We’re New Zealand’s fourth largest city, and one of the fastest growing areas in the country. The increase in costs to deliver services for our residents, and the rates revenue needed to do so, reflect this. And we’ve tightened our belt accordingly.

“Prices are going up for everything from electricity to insurance, concrete and fuel. The suggestion that Council or local government in general is immune to these financial headwinds is not reality.”

Council meets on 28/29 November to debate the proposed budget and decide what goes into the draft 2024-34 Long-Term Plan for community consultation in March next year.

Expected to generate much discussion and feedback are proposed changes to parking charges in the central city and targeted rates to fund community infrastructure and Hamilton’s response and adaption to extreme weather events.

“We are working hard to find the right balance between looking after our city and affordability,” said Mayor Southgate.

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