Aucklanders count cost of Goff's spending plans

10:12 am on 29 November 2016

Analysis - It's time for Auckland ratepayers to concentrate as the freshly-elected mayor Phil Goff unveils new ideas that might turn up on next year's rates bill - or might not.

Auckland Unitary Plan

Details of Phil Goff's 2017-18 taxes and council spending remains unclear. Photo: Auckland City Council

Mr Goff's initial proposal for the council's 2017-18 signals some big shifts, such as visitors to the city picking up the $20 to $30 million tab for tourism promotion and staging major events.

He's also putting a regional fuel tax on the bargaining table with the government, and pushing his promise to boost the earnings of the lowest-paid council staff with a living wage.

Some of the detail remains unclear, and Mr Goff will need not only the numbers around the council chamber, but also from Aucklanders, when the big ideas go out for mandatory public consultation.

The tourism sector opposes the visitors' tax concept, with both Tourism Industry Aotearoa and Hospitality New Zealand saying it mis-reads the wider economic benefit of visitors.

Two other high-tourism centres, Queenstown Lakes and Marlborough District, have a variation on a property rate targeting tourism.

The move to hit-up visitors to Auckland is not well-explained in the mayor's initial release of material.

It is not a direct bed tax - something which councils don't have the power to do. It would be a targeted rate, added to the rates bills of accommodation providers, who'd be left to work out how to recoup it.

An initial calculation suggests it could add 3 to 4 percent to accommodation tariffs, $6 to $10 in a posh hotel.

While the mayor's media release says the visitor windfall will "replace ratepayer funding", that doesn't mean that money will go back into ratepayers' pockets.

Instead, that ratepayer cash will help fund the city's infrastructure spend.

Phil Goff gives his maiden speech to the Auckland Council.

Phil Goff gives his maiden speech to the Auckland Council. Photo: RNZ / Todd Niall

He'll need to win over the tourism sector. Tourism Industry Aotearoa calls it "unfair and ill-conceived" and in a mixed metaphor says the council shouldn't try to "fleece the golden goose".

Mr Goff told RNZ's Checkpoint that last year Aucklanders faced a 9.9 percent average rates rise and that "his" increase would be only a quarter of that.

In fact last year brought a 2.5 percent average residential rate rise, plus a $114 per household, transport levy. Both will continue unchanged in Mr Goff's first budget.

The InterimTransport Levy, which has one further year in its planned three-year run, would be dropped only in the unlikely event that Mr Goff persuades the government to introduce a regional one by mid-2017 - if at all.

The proposal puts other ideas on the table which were bubbling to the surface during the previous term, such as new ways to fund infrastructure.

Mr Goff suggests a targeted rate on land, once it becomes clear to develop.

That would start to generate revenue, even if development was not underway, and the additional cost to the landowner is viewed by the mayor as an incentive to develop rather than landbank.

Mr Goff's pushing on with his election pledge to introduce a higher minimum wage for council staff - the so-called living wage of $19.80 an hour - but the estimated cost has more than doubled.

The mayor's campaign policy put the cost at around $4m a year, the latest estimate in his budget proposal is $9m, after a three-year phase in.

However difficult the 2017-18 budget becomes, it could be Mr Goff's honeymoon budget compared with 2018-19.

Auckland properties are revalued by the council next year, and the new valuations will be used from mid-2018 to decide how big a slice of the rating pie each ratepayer has to fund.

The tidiness of a 2.5 percent average rate rise will be distorted for many, whose properties have risen in value faster than the average, and could deliver double-digit increases for some.