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(Photo: Getty Images).
(Photo: Getty Images).

AucklandNovember 21, 2017

A tale of property, rates and bullshit

Senior Writer, NZ Herald
(Photo: Getty Images).
(Photo: Getty Images).

Auckland Council has released the city’s new property valuations and some people who should know better have taken the chance to say all sorts of stupid things. Simon Wilson sets them straight.

Jo Holmes from the Auckland Ratepayers’ Alliance was on RNZ’s Morning Report today saying that Aucklanders will be paying “thousands of dollars” more in rates because of the new property valuations. Chamber of Commerce boss Michael Barnett joined her to complain that property valuations lead to “a progressive wealth tax”. And both of them repeatedly said we pay more in rates but we have nothing to show for it.

All of those things are wrong, and here’s why.

First, looking at the relationship between rates and property valuations, it helps to think of rates as a pie.

The size of the pie is determined by council. It factors in its other sources of income (investment returns, charges for some services, etc), and what it expects to spend running the city. This year, the rates pie grew by 2.5%, which was what mayor Phil Goff promised would be the maximum average annual increase in this term of council. We can assume it will rise 2.5% next year and the year after as well.

The size of the pie is not determined by property valuations.

The share of that pie you pay for, however, is determined largely by the value of your property. It’s calculated as a proportion of the value of all property. When property is revalued – which happens every three years – that proportion is likely to change.

In the new valuations, Auckland properties have risen by an average of 46%. If the value of your property has risen by more than that, you will pay a slightly higher proportion of the total, and therefore your rates will probably go up by more than 2.5%. If the value of your property has risen by less, your rates will probably rise by less than 2.5%. (You can check the new and old valuations on your property here.)

I’ve said “probably” because other factors may also affect your rates. Currently, for example, there’s a special transport levy built into the rates, which council has to decide to cancel or continue with. But it should be clear: if your property value has risen by 46%, or anything like that, you should not fear a rates shock next year.

Auckland Chamber of Commerce’s Michael Barnett and the Auckland Ratepayers’ Alliance Jo Holmes.

So what about the nonsense?

Early in the interview, Michael Barnett made an accurate and important point. He said, “If you’re over that 46% [average increase] you’re likely to have an adjustment in your rates.” That is, only some people will be paying more.

But the point was lost in the kerfuffle, as Jo Holmes, speaking for the Auckland Ratepayers’ Alliance, got stuck in. She told interviewer Guyon Espiner: “We want council to keep rates as low as possible. The ratepayers are already really hard hit in the pocket. This will mean inevitably that rates will rise, the dollar rate will rise quite considerably … Unfortunately, the council will get a lot of extra money but we never see any extra benefit in services.”

Taking her points one by one:

  • Everyone wants to “keep rates as low as possible”. The debate is about what services council should provide and what they should cost.
  • Ratepayers are not “really hard hit”: as mentioned above, rates went up just 2.5% this year and the council seems committed to that ceiling.
  • New property valuations do not make it “inevitable” that rates will rise, as explained above.
  • The dollar rate will not rise “considerably”. More on this curious claim below.
  • The council will not get “a lot of extra money”. Property owners, on the other hand, will – when they sell their properties. They are the winners in this whole exercise.
  • It’s complete nonsense that we “never see any extra benefit in services”. The council has a busy programme of new services, responding to community demand, ranging from making the roads safer for all users to fixing the flood-prone stormwater systems, providing summer entertainments to renovating the seawall by the historic Ferry Building.

Holmes then said: “Council has made an active decision to spend huge volumes of money on all kinds of projects of dubious value to the ratepayer, that’s my, ah, you know, that’s the general opinion across Auckland … Of course, council will always try and raise extra revenue to spend spend spend spend, but it’s the ratepayer who always ends up paying.”

So, unpicking that:

  • You can’t really have it both ways. Either the council is not providing extra services or it is.
  • “The general opinion across Auckland”, as expressed in the council election, does not align with hers at all. In most parts of the city voters decisively rejected the super-low rates approach of the Ratepayers’ Alliance.
  • The council doesn’t “always try and raise extra revenue” so it can “spend spend spend spend”: Goff’s 2.5% pledge is moderate and has led to real hardship in many parts of council. Just ask the Auckland Art Gallery, whose budget has been slashed.
  • But yes, she’s right, the ratepayer ends up paying. That’s what being a ratepayer means: you pay rates. It’s a tautology posing as a complaint.

Then came Holmes’ most egregious statement. Espiner asked her why anyone would complain about a rates rise of “a few hundred dollars”.

“Well no,” she said, “it’s not a few hundred extra dollars on the average rate. I think we’re talking in the thousands here.” She seemed to be saying your rates will rise by the same percentage as your property value.

  • Utterly untrue. Rises in property valuations are distributed on a normal bell curve, meaning that most of us are grouped near the average and the new valuations will not cause any noticeable change to our rates.

In fact, it’s only for some of those with the highest average increase in property valuations – 64% on Waiheke Island – that the increase could stretch even to the hundreds. If that’s you, console yourself with the memory that three years ago you had one of the city’s lowest increases, of only 10%. Your rates quite possibly went down.

To his credit, Michael Barnett of the Chamber of Commerce challenged Holmes on this point. “I think there are probably a couple of points you need to correct,” he said. “And the first one is that the pie doesn’t change considerably. So the amount of money that the councils collect as a result of this isn’t a hell of a lot more.”

Very true. Unfortunately, Barnett then seemed to forget he had said that, and went back to his own main complaint – that rates rises are unfair on the wealthy.

His argument was that if you pay more in rates, you should get more in services. Rates go up but “there is no corresponding increase in benefit, no corresponding increase in services to you. To my mind it is simply a progressive wealth tax.”

Well spotted. We do have a progressive tax system in New Zealand: the greater your income, the higher proportion you pay in tax. That applies to property values, but it doesn’t apply directly to increases in those values, as explained above.

Houses in Auckland. Photo: Getty Images

Later, he tried again: “What it means is if your house is worth more [more than 46% more, presumably] it goes up in value, then you will pay more rates and that’s the unfairness of it … Yes, we need to invest, but let’s do it transparently, let’s do it equitably … Just because I’m rich and you’re poor doesn’t mean there’s a difference in services or quality of services provided … If there’s a need for more money, more investment, be transparent, be fair, be equitable.”

It wasn’t clear what he meant. That when rates go up they should do so in dollar terms, the same for everyone? That would introduce a massive transfer of wealth to the wealthy.

Espiner asked him how the rates system should change. “I’m not sure,” he said.

More Reading

Holmes got the last word. “[Council] services are definitely, definitely going down and they’re blowing out their budget right left and centre because they will not get their spending under control, and they will not get their bureaucrats under control, and it’s always the ratepayer who ends up paying.”

We’re coming up to 10-year budget time: the council will receive a draft from the mayor later this month and it will go out for public consultation in February and March next year. Mayor Phil Goff has told me they will be able to fund only two-thirds of the spending programmes council officers initially proposed. So here’s a prediction: the 10-year budget will not be about “blowouts”, but will be stuffed full of desperate council attempts to cut costs without cutting services.

The debate will not be about profligacy. It will be about how to retain essential services and how to build a better city with not enough money. Yes, we have a budget crisis. But not in the way Holmes insists. Her approach is both inflammatory and irrelevant.

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AucklandNovember 21, 2017

After the West Lynn debacle: a better way to plan Auckland’s suburbs

Senior Writer, NZ Herald
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After the disappointments of West Lynn, Simon Wilson proposes some principles to help the council with its suburban town planning.

The possibilities for Auckland are no better expressed than on Great North Road: that wide slow slope down the ridge from Karangahape Road to St Joseph’s, the views across to the upper Waitemata and to gentle green of the Waitakeres, the sunsets that set the sky ablaze, the warm evenings and brisk mornings, the broad street that even at its busiest never stops offering an enticing possibility: that so much more life could be lived there.

In 20 years – 10 years – there will be apartments and other blocks with mixed use, retailers and other commercial tenants pleasantly rubbing shoulders with residents, off-street complexes thrumming with life, with cinemas and with who knows what other entertainment venues we’ll crave in a decade or two.

A light rail system, running on grass; perhaps buses too; driverless cars in a dedicated lane, all of them running so well that people will be amazed to think anyone in their right mind ever wanted to drive their own car into town.

And as for walking and biking, what a delight that will be. Up and down the beautiful first great stretch of the Great North Road. Retailers with an inside/outside approach, and big grass berms and many more trees with cafes spilling into the outdoors, so it’s like being in a long, wide strip park. The car yards gone, of course, because, 1) we don’t drive so much anymore and, 2) driverless cars and, 3) car yards are not a good use of that land and, 4) cars will not be sold out of giant car yards anymore.

Yes, there will be scope for service vehicles. Yes, people who do still drive will be able to do it. It’s just that the rebuild of the community will not be structured around them. And maybe the Bunnings will stay – but it won’t be the best anyone can imagine for the street.

Great North Road looking down to the spire of St Joseph’s. A street that deserves better than car yards. (All photos Simon Wilson)

At the heart of all this will be community. Many more businesses, with many more customers living and working nearby. Many more choices in quality and range of things to buy, things to do, services to help us, many more reasons to love living and/or working in Grey Lynn.

Grey Lynn, and particularly Great North Road, will quickly become one of the best places in Auckland: close to the city and densely developed, full of opportunity, full of people, and also beautiful, relaxed, suburban in all the best human-scale ways.

But it will also be followed quickly by many other suburbs, because they will see how good it is and they will want some of that for themselves. The real purpose of getting Grey Lynn right is to create an exemplar: a place to give the rest of the city confidence. And with that, Auckland’s town planning, finally, will enter its golden age.

For proof that this is so we need only look at the attempts currently being made by council to improve the suburb. Oh no. Wait.

The shops in this little West Lynn block include a restaurant and two cafes: how about a proper plaza?

Another way to look at West Lynn

The regeneration of the West Lynn shopping centre, covered yesterday, has been a bitter disappointment. Improvements to what’s there now will be made, but the vision and the final execution will remain a sad indictment of the council’s ability to get things right.

The irony is that the council – Auckland Transport (AT) in particular, whose project it is – has been caught between competing demands, and instead of finding a happy medium it has sunk beneath both.

On the one side, many residents want to retain the ability to drive when and where they like, and to have town planning based on that principle. Many retailers support this idea, believing their customers need to be able to park outside the shop or they won’t visit.

On the other side, pedestrians and cyclists want the planning to be reprioritised. Cars shouldn’t have any special right to the road, but should be asked to share it, with respect, with other users. It’s not a nutty idea: it’s the working hypothesis on which a city like Paris operates.

AT has approached the issue by adding bike lanes, making safer pedestrian crossings and moving the bus stops to more favourable sites. It’s taken out as few carparks as possible, and the traffic calming has been minimal.

But what if AT had presented the community with a plan for a bold new shopping village? Perhaps something like this:

  • A plaza along parts or all of the north (sunny afternoon) side of the street, to enable the cafes, bars and restaurants to create a sizeable outdoor area for customers, and for the other shops to use for market days or suchlike as well. And a little wired performance area because what I hear is there are quite a few people in that suburb who know how to sing and play songs.
  • Some big trees.
  • Some grass.
  • Some other good planting.
  • A parking bay at the east end (where the street is very wide), so drivers are encouraged to cluster at that end.
  • Raised crossings at every side street.
  • Easy to use bike lanes.
  • A 30km/h speed limit.
  • Signage that helps drivers find a good place to park.

The idea: you make it a really nice place to be not in a car. So people leave their cars at the edge, or at home, and come into the village to shop, eat, drink, relax, enjoy themselves.

The council doesn’t give each side of the old debate a little of what they want. It raises the bar for all of them: does its best to win them to a vision of a better village than anyone had thought of before.

Maybe you like that idea, maybe you don’t. But whatever you think of it, the main point is that council has to rethink the way it goes about remaking the shopping villages and streets and suburbs of the city. “Placemaking” is the phrase, and they’re not as good at it as they should be.

Looking toward the north side of the West Lynn village, where the shops are now below the road and nothing has been done to create a good environment outside them.

Eight principles for council placemaking

Here’s a way council might do these things better.

1 Start with the community

Community initiatives should drive a lot of council planning. What do people who live and work here think the problems and opportunities are? If council wants to progress things, for reasons of better transport or sewage or whatever, step one is to establish a working relationship with the community: to win their support for a process that will put their ideas front and centre.

2 Council should lead as well as follow

That’s not the same as just doing what the community wants. Most people don’t want anything – they’re afraid of change, they look back not forward, they see problems rather than opportunities, they generalise from one bad experience instead of 10 good ones, they are suspicious and cynical and would just rather knock things down.

But while we all have the liberty to hold on to what we’ve got, prioritise what’s valuable in our current lives, the council has to build for the future. We barely even need a council just to hold on to what we’ve got, but we do need one to look ahead. And that means progressive ideas – ideas that identify threats and opportunities and the new ways we will live, and aim to build something good to enable us to flourish when we are living in those new ways – progressive ideas have to be prioritised. That’s council’s job.

So good government is about leading by following and following by leading. Winning support for good ideas (like that plan for a plaza etc in West Lynn?) and generating community engagement to turn their own good ideas into great ones.

The most fundamental trick of good government – one of two fundamental tricks, along with budget control – is to engage with communities so that their optimism and confidence and best ideas are unlocked. Remarkably few governments bother.

3 Joined up thinking, and planning, and execution

I cannot tell you how often I’ve heard the mayor’s office blame the council staff who blame the councillors who blame the local board who blame Auckland Transport or whatever CCO it is who blame the mayor and on it goes. This ring-a-ring-a-rosies where no one ever falls down is not acceptable.

They are the council. They can’t work together? We have a CEO: he should make them. We have a mayor and a governing body capable of making decisions: they should hold the CEO to account on it.

Who’s responsible for the West Lynn debacle? Auckland Transport. But the CEO’s own executive has placemaking responsibilities too, and so do Panuku Development Auckland, and the council’s design office, the mayor’s office, the councillors, the local board and the specialist urban design panels. Who, among all of them, managed to get it stopped and fixed and made good? None of them. Who tried?

At West Lynn, these are the two best trees on the street, but there’s been little attempt to use them to create a nice place to linger.

4 Creative thinking

Why do so many suburban makeovers look identical? Kitset design saves money but only because it’s easy to do. Creative place-based solutions might take more time to conceive and get approved, but they don’t have to be more expensive to build.

The problem in Auckland is that engineers are in charge. Not designers and not marketers, either. AT is the classic example, where the delivery teams that build the projects appear not to be beholden to anyone who creates them.

Engineers prioritise functionality, which is important, but we also need people who prioritise human aspirations. Make it work, of course, but make it wonderful too.

5 Good budgeting

I don’t mean over-generous budgeting. I believe before they spend a cent on remaking roads they should put out some orange barriers and tape and bodgy up the idea, see how it works, see what can be improved, see if it works at all, and then spend the money.

But I do think enough money should be spent to make the project good. Ugly asphalt when it could be nicer concrete? It’s not good enough.

6 Enable commerce and quality of life and environmental improvements

When you redo a shopping village it’s axiomatic that you’re aiming, 1) to bring more shoppers, and 2) to make the experience of being there better for shoppers.

When I first saw they were giving West Lynn a makeover I was really pleased. It was an old-fashioned street dominated by parked cars, and yet the trees on the side roads, the breadth of the road, the westward slope, the quality of the shops themselves, all give West Lynn great potential to become a truly charming, pedestrian-focused (and therefore shopper focused) little community.

But the biggest mark of the failure in West Lynn is that, while it will be safer, it is not more delightful. All that disruption, all those disputes, and for so little.

West Lynn looking east, after the makeover: it’s scarcely credible that this is Auckland Transport’s vision of the future of suburban shopping.

7 Communicate communicate

If you’re the council agency disrupting people’s lives, for whatever purpose, you engage the community at the start and you keep them engaged. You keep asking for ideas and you treat them seriously. You keep telling people what you’re doing and why.

You do all this in a way that engenders a sense of ownership in the community.

From the council’s point of view the outcome you want is this: A community where what they believe and say to each other is: This is ours – our street, our shopping centre, our park, whatever it is – and with council’s help, look at the neat things we’ve done with it.

Regeneration projects are an opportunity for the council to make everyone feel good about the city. To make everyone proud.

8 Own it

No passing the buck. That vicious circle of council staff who can’t work with CCO who can’t work with councillors who can’t work with the mayor and so on, that’s also a vicious circle of buck passing.

Ask a council person whose fault it is that the West Lynn shops have not turned out as well as they should have, and the answer will depend entirely on who you’re talking to.

But there is only one real answer: the council. It might be Auckland Transport or the local board or whoever, but they’re all the council. We, the citizens, don’t care how they divide themselves up and we shouldn’t have to. They are the council. They are responsible, collectively, to us.

Great North Road: how long before Bunnings looks out of place?

And in the end

The mantra of the previous mayor, Len Brown, was: get it started and more will follow. Show people how good it can be and they’ll join the crusade. That’s what should have happened in West Lynn, and it’s why West Lynn is important to the rest of the city.

The current mayor, Phil Goff, not so long ago said this: “Our vision for Auckland is a world class city where talent wants to live. It must be the city which can keep the best and brightest of our young people in New Zealand while competing globally with other cities around the world for skills, entrepreneurship and investment.”

Good on you, Phil. It’s a good vision. And with the council’s 10-year budget planning upon us, you’ve got work to do.

This feature is based on a talk given by the author to the Grey Lynn Business Association earlier this month.

simon@thespinoff.co.nz @simonbwilson