Rates are going through the roof and people are struggling. Even so, I’m going to say something that most mayoral candidates won’t admit. Rates are going to keep going up and anyone who promises that they can stop that happening is lying to you. The Government would sack the council and install commissioners if we did what it would take to stop rates increasing.
Let me explain. Rate rises are being caused by three things: increased debt levels, inflation and the need to upgrade our water infrastructure.
First our debt levels have risen. All councils use debt to pay for long term assets like infrastructure, as a way of spreading the cost over the life of the facility. Recently our Council has been borrowing money to pay for operating expenses – the day-to-day costs. That’s like borrowing money to pay for groceries and is something I have opposed. In fact, I led a revolt of councillors against the mayor’s plan in 2023 to borrow even more to keep rates down. That debt has locked in substantial rates increases for the next few years.
Second, we have all seen the cost of living rise due to inflation. Council costs have gone up more than households because of the kinds of things we spend most of our money on eg. construction.
Third, we need to upgrade our water infrastructure. For decades the council has underinvested in this and it’s now catch-up time. This will be the biggie for the next few years. I will write at another time about possible pathways forward but the reality is that the government standards have changed, and we need more expensive systems to meet them. Estimates are that we need $200 million over the next 10 years and it won’t stop there.
It is incorrect to say, as some do, that rates rises are because council spends money on “nice to haves” like the council building upgrade three years ago, the Mitchell Park upgrade, the boat harbour and the Rex Morpeth redevelopment.
The council building work, which was primarily about earthquake strengthening the Emergency Operations Centre, adds about $50 a year on the average rates bill. The Mitchell Park upgrade costs the average ratepayer less than $2 a year to provide some decent public toilets and add drainage.
The boat harbour wasn’t funded out of rates at all. At the Rex Morpeth / War Memorial hub the council has only budgeted money for essential maintenance such as fixing the leaking roof. There is also a small amount to rescope the proposal to something more affordable and to develop a plan to get outside funding to pay for it.
If you look at the council’s budgets, almost all the money is spent on core functions such as hard infrastructure (roads and pipes), community services (the library, swimming pool, sports fields, community halls etc) and things that central government requires us to do.
Despite what some candidates say, the only way to stop future rates increases is to not upgrade water infrastructure. That would put the community’s health at risk and put us in breach of the law.
It would almost certainly lead to the sacking of the council and the appointment of commissioners. Cutting out all the so-called “nice to haves” won’t make a significant difference to the rates, but it would suck the life out of our district. I do think there are other things we can do to help control council costs, but they are not enough to stop rates rising.
These include:
Less use of outside consultants. It means more staff if we want to bring more things in-house, but it would save us money and retain expertise in the organisation.
AI is changing how people work across the globe. We need to carefully make use of new technology such as AI to boost productivity.
The mayor needs to champion our district. They need to work with outside funders to help pay for community assets, leverage relationships in Wellington to unlock government funding and get the councillors working as a team.
Finally, we need to work with other councils to pressure government to fix the funding model for councils. Taking GST off rates and / or returning a portion of the GST raised in a district back to the council would help a lot, as would the Government paying rates on its properties.
I have said that I want the council to be more open and transparent. I won’t spin a story to try to win votes. If anyone is telling you that they will cut rates, ask them how.
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