Tauranga City Councillors have agreed to put a two per cent limit on future rates increases, but there are conditions.
The first is that it doesn't include next year – the 2012/13 year, which is already expected to be a 5.3 per cent increase.
The second is that the cap is a statement of intent only.
The Tauranga City Council offices on Thursday were the scene of a lively debate among councillors as they determined a new rates rise cap of two per cent.
While the cap is stated at two per cent, each annual rates change is based on the capped two per cent added to change for CPI inflation and a city growth percentage change.
Setting this target is a new legal requirement for the council, described by Councillor Bill Faulkner as the 'Rodney Hide memorial clause”.
While it is a new legal requirement, it is not binding on the council, and is a ‘feel good' thing, says Bill.
'With a couple of exceptions, most of us around here want to limit rates as we have limited our debt,” says Bill, 'but when it comes to our own individual wheelbarrows all those things get turfed out the door”.
'With the best will in the world the limit we impose on ourselves is only going to be while it suits us.
'I don't think it's going to have any influence other than a feel good factor.
'All we are doing is fulfilling a statutory requirement.”
The two per cent, plus the consumer price index inflation level, plus growth, was moved by Councillor Rick Curach, who says it will help the council's financial discipline.
'This is a notional number, but it does impose a goal to implement financial management,” says Rick.
'I'm not saying we don't do it now, but it gives the community confidence that we are nailing it pretty tough.
'We are on the border of actually delivering it. It's good, it puts pressure on us.
'In the first couple of years we probably won't achieve it, but in the long term gives the goal that we do want to achieve – and it gives our community confidence that we are imposing a limit there.”
Opposition, as voiced by Councillor David Stewart, is that the level is naïve and unrealisable.
Council planners use Berl inflation figures instead of the consumer price index.
The construction price index is climbing because of Christchurch, an inflationary factor not recognised by the CPI.
'It is setting the council up to fail and it will come back to bite, providing great fodder for people who want to have bite at the council,” says David.
Rick's motion was amended to come into effect in the 2013/14 year, after this year's 5.3 per cent increase, which obtained the support of the mayor and Larry Baldock.
Mayor Stuart Crosby spoke against the original motion because of the conflict with this year's rate.
'Some may have just been sitting around this table a bit too long,” says Larry.
'It sounds to me like Greece, Ireland or Italy.
'There's been a major earthquake in the economics of the world and governments – that's us – have to make some adjustments, tighten our belts.
'It's not just a one off, this is the way forward.
'We have to stop continually increasing government spending because it's destroying the private sector and we are all contributing to it.
'It isn't hard and fast, but it's putting accountability on ourselves.
'We have one year to work on it and we still have options. We will have ways of achieving this goal.”
Bill Faulkner's opposition continued, saying there are factors involved that council has no control over, including Christchurch's impact on building prices.
'There are lots of tradesmen rushing down here doubling their charges,” says Bill. 'We've got the foreign exchange rate, which affects the stuff we do.
'We have got oil which is major cost as a lot of things are oil based.
'We've got from 2005 floods $18 million of stormwater.
'This is just pie I the sky stuff.
'All you will do is that you will set this limit and we will waste more days and days of debate while we justify and undo the mess we have sewn ourselves up in.
'I won't be supporting it.”
It was passed by one vote with Bill, David Stewart, Tony Christiansen, Wayne Moultrie and Terry Molloy voting against it.
The previous Ten Year Plan, 2009-19, was prepared during a time when growth was still a major factor driving the city's development.
That growth was predicted to continue at between 2-3 per cent per year – bringing increased population and demands on council facilities.
The council is still recovering from a significant weather event in 2005 that required over $15 million of unplanned investment in stormwater infrastructure and rehabilitation of heavily damaged areas.
Since then, due to the global financial crisis, growth in Tauranga and the Western Bay of Plenty has slowed down to about one per cent per year.
This level of growth is expected to continue in the short to medium term which is enabling the council to take a bit of a breather in terms of the speed of developments.
It doesn't mean the council can cut back entirely from putting new infrastructure in and above the ground nor can it sit back and stop essential maintenance and replacement of existing infrastructure.
Population and business growth is still projected to increase – particularly as the Port of Tauranga assumes greater significance in the economy aided by the completion of the state highway network and the drive to bring more educational and corporate/governmental businesses to Tauranga.
12 comments
Rates go when there is Growth?
Posted on 27-01-2012 13:48 | By Surfwatch
You would think that rates would go down when there is growth in the area. Any excuse to justify a rates increase. Next year there will be a negative growth and then the council will say the rates had to increase to cope with the negative growth. The Council should look ahead and calculate just how much the rates will be if they continue to increase the rates by more than the inflation rate as they have in the past. One day the rates will be more than the house is worth. Rates increasing each year by more than inflation will only serve to decrease the value of your property.
Tcc should be called BEA
Posted on 27-01-2012 13:51 | By SpeakUp
= bovine excrement artists. Of course the usual suspects voted against austerity (namely Bill Faulkner, David Stewart [who just left his double-dipping 170000$ a year CEO role in TCAL], Tony Christiansen, Wayne Moultrie and Terry Molloy...wait for your re-election) because they have no respect of private property rights or it impinges on their delusional grandeur and might even curtail their obscene profit. That anybody within this half-a-billion-$-indebted Council should voice any valid opinion on the present and future financial position of Tauranga ratepayers seem preposterous. Noting short of a full and comprehensive examination of TCC doings will suffice. Councillors of the last 15 years will go down in history as causing the demise of Tauranga city. The CMC will make sure of that. -Citizens Monitoring Council-
Ridiculous
Posted on 27-01-2012 14:37 | By Jitter
If TCC say they are putting a 2% "feel good" cap on rate increases and then immediately state that this will be over ridden, what is the point of announcing it in the first place. Fills in their time to debate this sort of rubbish I guess.
Distraction might work on kids
Posted on 27-01-2012 14:46 | By Openknee8ted
With the council been proven to be inept at forecasting it is a waste of time debating future rate increases. It is just a distraction from the huge current rate increases.
Posted on 27-01-2012 15:52 | By charob
can someone tell me what we get for our rates apart form the privelage of living on our section................ i see i pay for the buses that I never use. rubbish disposal. gee i pay the rubbish company to take rubbish away, so guess paying that twice. think i may become one of those homeless people and live in the new shelter tht they are building....... no rates there
This is Cr. Bill Faulkner and accomplices, NOT TCC ...
Posted on 27-01-2012 19:08 | By Murray.Guy
If TCC say they are putting a 2% "feel good" cap on rate increases and then immediately state that this will be over ridden, what is the point of announcing it in the first place. Fills in their time to debate this sort of rubbish I guess .... It was Cr Bill Faulkner and 4 co-voters who argued they would vote for their pet projects (whatever in their pet project barrow), regardless, so the idea of identifying a rate requirement cap was a waste of time. Fortunately Crs Bill, David, Terry, Wayne and Tony are in a minority, fortunately there is a 'wind of change' that genuinely seeks to ensure best outcomes for our residents and ratepayers. I note that Hamilton City Council have this day applied a similar rate cap discipline.
Watchdog
Posted on 27-01-2012 19:59 | By The author of this comment has been removed.
Now would be as good a time as any to revert to Zero Based Budgetting. For too long we increase by a percentage on what was increased by a percentage the previous year and up and up it goes. ZBB forces a total rethink. Whilst it takes more effort the results would benefit the very people who pay the rates that allow this spending to occur so: The Advantages of Zero Based Budgetting are: 1. Efficient allocation of resources, as it is based on needs and benefits rather than history. 2. Drives managers to find cost effective ways to improve operations. 3. Detects inflated budgets. 4. Increases staff motivation by providing greater initiative and responsibility in decision-making. 5. Increases communication and coordination within the organization. 6. Identifies and eliminates wasteful and obsolete operations. 7. Identifies opportunities for outsourcing. 8.Forces cost centers to identify their mission and their relationship to overall goals. 9. It helps in identifying areas of wasteful expenditure and, if desired, it can also be used for suggesting alternative courses of action. Note that Tauranga City Council once used to use this method. I suggest it is worthy of another look.
@TCC
Posted on 28-01-2012 09:26 | By nerak
Note that, re Christchurch City Council,: in the last week there have been calls for the councillors to be sacked and replaced by commissioners. A brilliant idea, which should immediately apply to TCC. The time is near...
Decrease would be better
Posted on 28-01-2012 10:28 | By Openknee8ted
We are paying too much now, it should be a decrease of 2% enforced.
Off with their heads now why wait till 2013
Posted on 29-01-2012 12:40 | By RORTSCAM
Yes cut the claptrap and provisos. Why do you think 2013/2014 selected as a start date correct that is after next Council elections in 2013.The best solution is to appoint a Local Govt Commissioner now to run Tauranga for the next 2years.
Rates crap
Posted on 30-01-2012 09:15 | By Gee Really
Refreshing honesty on the part of councillors who voted against a rates cap because it looked unlikely to be kept. Cr. Guy, I'm not so sure about councillors who voted for a cap which looked good for them until I realised they all went on to vote for a $5million injection to Baypark. Voting for a rates cap then $5million to Speedway and then virtually giving away a central city block of land for Education seems to defy the laws of finance and credibility.
Ridiculous
Posted on 02-02-2012 16:13 | By Jitter
The wonderful 2% rate increase TCC talk about, is on top of the Consumer Price Index Inflation Level plus Growth and is totally misleading. No way are "rates" ever going to be kept to 2%. It doesn't matter what you call the basic charges they are still "rates" to the ratepayer. I will be amazed if we ever get anywhere near a total annual increse of 5% which TCC are waffling about at the moment. I am guessing at nearer 10%+ with the amount of loans TCC have to service plus the new projects they keep adding to the pile. We are looking at at last $100 million to upgrade the sewage treatment plant then add Papamoa East to the "all our eggs in one basket scheme". Absolutely bloody hopeless.We should be doing a Christchurch and demanding all of TCC resign.
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