Published 6 March 2008
Manukau City Council was halfway through a 6-year spell in its long-term plan for which it agreed a 5.9% annual rate rise, when it broke the circuit.
The half hour at the end of a 12½-hour meeting day was hardly the time to be setting new policy, but councillors had been working towards it. They questioned the rationale for various staff capital proposals and even turned down further spending on one which had been promoted to the Regional Economic Development Forum only a week earlier as a valuable tourism prospect.
So when the councillors reached item 24 on the agenda, the level of rate increase, it was no surprise when mayor Len Brown recommended a 4.9% increase instead of the 5.9% staff had been working their numbers on.
Councillors had looked at 4.9% on 25 February, though staff advised them this level of increase was unsustainable. Unlike some councils in the region – still expanding staff numbers in line with boom times – Manukau has reduced staff over the past year, largely through technological efficiency gains. But despite the change in leadership – Mr Brown replacing longtime mayor Sir Barry Curtis and some bright new faces around the council table – the city still holds aspirations for capital improvements.
Not quite in the same grand vein as Sir Barry would have had things; in fact, more mundane, down at quality service level.
New councillor Michael Williams kept pricking the balloon long after others thought it was already deflated. And second-termer Jami-Lee Ross was impressive in turning the planning for a city-centre parking building on its head: Why was the council spending money on design & consents ahead of the ownership model? If you chose not to own it – and he argued it wasn’t council business – an enterprise which knew how to develop & operate such businesses would take it on if it saw commercial value.
These were councillor moves for a radical rethink on spending. Councillor (& Property Council researcher) Daniel Newman joined them, suggesting a low-depreciation, high-debt model for the council.
That would push costs on to future generations. At the same time, though, these councillors talked of getting rate rises down to the real inflation rate (3-4%?) rather than the council rate of inflation (about 5%), recognising that continuing hefty rises will become unaffordable for ratepayers and therefore unsustainable.
Which sustainability has priority: Sustaining service levels through the city, with upgrades, as people continually expect, or sustaining price rises at a manageable level? Politicians tend to think of price rises in electability terms, and there was some of that at this meeting, but mostly the thought was for the ratepayer pocket: How can a council justify continually raising rates beyond the stated consumer inflation rate?
Other councils are facing the same issue: To maintain the expected upgrades in services & capital works, huge cost rises are required and the sole mechanism for most to cover those costs is a rise in rates. Councils tend to ignore reality in budgeting far beyond the rest of the world’s inflation rate, so the Manukau vote was a welcome pause, though it fell far short of the deep & penetrating thinking councils will require if they’re to escape the cost-plus spiral.
The council’s finance director, Dave Foster, explained how the councillors could opt for a lower rates increase this time but that, eventually, rates increases would have to catch up. But he also introduced a palliative, so rates increases will be grouped closely around the proposed rise in 2 property revaluation years, rather than having a rates increase that could vary between 4.1-15% next year.
The proposed rates increase & draft annual plan now go to public consultation. Submissions close on Friday 18 April, with public hearings Tuesday-Friday 29 April-2 May and adoption the plan scheduled for Thursday 19 June.
Want to comment? Email [email protected].
Attribution: Company statement, story written by Bob Dey for The Bob Dey Property Report.