spinofflive
Wellington Town Hall (Photo supplied, additional design by The Spinoff)
Wellington Town Hall (Photo supplied, additional design by The Spinoff)

The BulletinMarch 15, 2024

Why council rates are going up and up

Contributing writer
Wellington Town Hall (Photo supplied, additional design by The Spinoff)
Wellington Town Hall (Photo supplied, additional design by The Spinoff)

After decades of under-investment, councils are facing up to their infrastructure deficits – and being pummelled by high inflation and interest rates in the process, writes Catherine McGregor in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

Where rates are going up the most

With long-term-plan season getting underway at councils across the country, it won’t be long before councillors are voting on rates increases for the coming rating year. Based on proposed figures, the average homeowner will be paying 15% more ; the unluckiest will be shelling out a lot more. The biggest increase is in Westland, where Buller District Council ratepayers are set to pay a whopping 31.8% more in 2024/25. Among the others hardest hit are those paying rates in Napier (a 23.7% increase), Hamilton (19.9%) and in the Greater Wellington Region (GWRC) at 19.8%. Not all increases are so large, but almost everyone will be paying a lot more than in recent years. The latest increases represent a huge change from historic averages: according to a new report commissioned by Local Government NZ, the average rise in the 20 years to 2022 was just 5.7% per year.

Why they’re going up so much, so fast

That LGNZ report, prepared by Infometrics economist Brad Olsen, isn’t just focused on individual councils’ rates increases. The report also looks at the cost pressures that are forcing councils to raise rates so much, and finds that, like all of us, councils are being hit by a double whammy of high inflation – the cost of building a bridge is now 38% more expensive than three years ago, for example – and higher interest rates. Councils are also facing new, more expensive cost pressures including the demand for infrastructure in high-growth areas, coping with growth in tourism, and adapting to climate change and increasing natural hazards.

Councils at financial breaking point

While rates increases can meet some of those cost pressures, ratepayers can only be asked to pay so much. According to the Infrastructure Commission, local government is collectively facing a $52b infrastructure deficit. “It’s simply not able to pay for that,” writes Newsroom’s Jonathan Milne. Already some councils are close to their financial breaking point. A Newsroom survey found that 11 councils have net debt-to-revenue ratios of more than 200%, with Hamilton City Council the worst at 281%, just four points below the limit on council debt covenants. Those councils at the high end of the scale would be teetering on the edge of bankruptcy if they operated as businesses, Milne writes. As GWRC’s Daran Ponter tells him, “You would only need to have a council that’s close to its debt ceiling and then a Cyclone Gabrielle or a Cyclone Bola-type incident and bingo, you probably have the recipe for insolvency.”

More Reading

    ‘An enormous, unprecedented victory’

    Amid all the gloomy news for both councils and ratepayers, a ray of sunshine just emerged from the Wellington City Council chambers. Councillors yesterday overwhelmingly rejected the widely criticised, Nimby-friendly recommendations from the independent hearings panel (IHP), instead approving a raft of pro-density amendments to the city’s District Plan. Twelve hours later, Spinoff Wellington editor Joel MacManus can still hardly believe what happened. “The new Wellington District Plan is the biggest, fattest W in the history of the pro-housing movement in this country,” he writes this morning. “For the Yimbys, the New City, the progressives, the urbanists, a City for People, for anyone who wants to own a townhouse or apartment in Wellington one day: this is an enormous, unprecedented victory.”

    Read Joel’s live blog of yesterday’s historic council meeting here.

    Keep going!
    Christopher Luxon (Image: an amateur photographer occasionally experimenting with editing)
    Christopher Luxon (Image: an amateur photographer occasionally experimenting with editing)

    The BulletinMarch 13, 2024

    A government on the fast track making no apologies about it

    Christopher Luxon (Image: an amateur photographer occasionally experimenting with editing)
    Christopher Luxon (Image: an amateur photographer occasionally experimenting with editing)
    newsletter

    The unprecedented use of urgency is “great”, and the fast-track consenting bill, deliberately disruptive, writes Anna Rawhiti-Connell in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

    Fast track consenting ‘deliberately disrupting the system’

    Announced last Thursday, the government’s fast-track consenting bill for infrastructure projects was the subject of an interview between Q&A’s Jack Tame and the minister for housing, infrastructure and RMA reform, Chris Bishop, on Sunday. When asked if it was appropriate for ministers to use ministerial discretion to overrule judicial decisions as allowed by the bill, Bishop said they were trying to “change the system”, he makes “no apologies for it”, and that they are “deliberately disrupting the system”. As an example of the value of longform, on-camera interviewing, it’s worth a watch. At the announcement, Bishop described the approach as a “one-stop shop” system that would “cut through the thicket of red and green tape holding New Zealand back, make it clear to the world that we are open for business, and build a pipeline of projects around the country to grow the economy and improve our productivity”.

    Officials didn’t have time to consider environmental impacts

    Catherine covered the alarm bells being rung by environmental experts about the approach in mid-February. Ecologist Marnie Prickett told The Spinoff then that it wasn’t “normal, everyday bill-making” and that it would “bypass environmental law that we have had in place for 30 years”. It is one of the most significant components of the government’s 100 day plan. As the Herald’s Thomas Coughlan writes in a good overview of what the bill will allow and what it overrides, it gives ministers the ability to effectively consent to proposals themselves, with expert panels only able to apply relevant consent and permit conditions.  As Newsroom’s Jono Milne details, officials didn’t have time to consider the bill’s impact on fisheries and conservation estate. The government has likened the bill to the previous fast-track consenting legislation put in place during the Covid pandemic, but Bell Gully’s Natasha Garvan and Will Hulme-Moir highlight a number of key differences.

    Record set for use of urgency

    The fast-track consenting bill and the rhetoric around disruption, speed and getting things done is dovetailing with concerns about the government’s use of urgency during the 100-day plan period. As Newsroom’s Marc Daalder reports, data from the parliamentary library shows that urgency has been used more than ever before at such an early stage in the term. RNZ’s Jo Moir cites Victoria University’s Dean Knight, who says the claim that the government has a mandate for abnormal, expedited law-making is “nonsense and illogical”.

    Urgency taking a toll as Luxon’s radar diagnosed as on the blink again

    For all the talk of “kick-arse” and “great” progress when questioned about speed, the question of Luxon’s political radar has entered the chat again after first appearing around his handling of the accommodation allowance issue. The Post’s Luke Malpass noted Luxon struggled and seemed tired when speaking to the cost increase caused by changes to the way interest deductibility for residential investors will be phased in on Monday. Malpass points to days of urgency. The Herald’s Audrey Young (paywalled) suggests it is not so much the change that’s the sin but the inability to front it with the gravitas required. Young observes that “It is reasonable to adjust a fixed plan as circumstances allow. But it should not be dismissed as something done lightly. And if it has to be changed now, when the ink on the coalition deal is barely dry, what else might change?”