Can Auckland's Phil Goff keep a lid on rate rises?

10:53 am on 22 August 2017

Analysis - Auckland mayor Phil Goff isn't giving up on his 2.5 percent rate rise pledge, but his opening pitch for the city's 10-year budget raises serious doubts, writes Todd Niall.

Auckland Mayor Phil Goff, image of Auckland city.

Phil Goff says his "preference" is to keep rates in Auckland low and reasonable. Photo: TNZ / 123rf

Since being elected in October, Mr Goff has set his priorities in line with the past direction of the council - infrastructure, transport investment, boosting home construction and the environment, especially water quality and climate change.

Mr Goff's initial paper for the 10-year plan - released today and kicking off discussion behind closed doors - highlights the financial pressures behind meeting those goals, and makes it clear that much of the answer lies with the central government.

Read the mayoral paper online here.

The most pressing problem is transport funding, where the programme of investment that has been agreed with the government is still $5.9 billion short of funding in the first decade.

The council's three-year Interim Transport Levy of $114 a year on households is due to lapse next year, but the permanent source of new funding designed to follow it has not yet been agreed.

The government favours some form of road pricing, which could take years to set up, while Mr Goff would like to bring in a regional fuel tax, even if only to plug the funding gap, which will widen from next July.

Mr Goff's headline pledge in being elected last year was to hold average rate rises at 2.5 percent.

"It's certainly not gone - my preference is to keep rates low and reasonable," Mr Goff told RNZ.

'Preference' is the new language around the 2.5 percent figure, and in his paper Mr Goff proposes that officials model future rate rises of between 2.5 and 3.5 percent.

When asked about his election pledge, Mr Goff's response was to remind RNZ of his other campaign line - that some new form of revenue would also be needed.

WATCH: Auckland mayor Phil Goff on the city's 10-year plan:

"What I was looking at particularly for transport infrastructure, was some form of road pricing system where you'd pay through either a regional fuel tax or maybe that would evolve into a congestion tax, and the government has talked loosely about a tolling regime," he said.

Mr Goff said the government had asked the council to look at all options over funding its extra share of the transport spend.

But he has also taken a stand against significant asset sales, such as the council's airport shares or the port company operation.

"Between the two, it's probably close to $100 million a year in dividend revenue - why would you sell something that was a good producer of revenue?"

Today's mayoral paper suggested officers explore the sale of non-strategic assets and look for new rating revenue, such as on residential units regularly rented out for commercial gain using websites such as Airbnb.

Much off the paper underlines ideas already under way before Mr Goff was elected.

These include the statutory value-for-money reviews of council operations, called Section 17A reviews, and ongoing efficiency savings such as more group-wide purchasing across the council group including its major agencies.

The council will spend the next three months kicking around its options on the 10-year-budget, before the mayor launches the formal process in December, with a more definitive position on the ideas he wants to pursue through public consultation and debate.

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