ARA submission on Auckland Council Budget

Auckland Ratepayers’ Alliance PO Box 133 099, Eastridge, Auckland 1146 Phone: (09) 2815 172 Email: enquiries@ratepayers.nz

22 March 2017

Auckland Council Private Bag 39200 Victoria Street West Auckland 1142

By email: annualbudget@aucklandcouncil.govt.nz

Dear Councillors,

ANNUAL BUDGET 2017/2018: Submission of the Auckland Ratepayers’ Alliance Introduction

1.

This is a submission by the Auckland Ratepayers’ Alliance in response to the consultation document for Auckland Council’s Annual Budget 2017/2018 (“the Budget”).

2.

Should the opportunity present itself, we would like to appear in person to present orally.

About the submitter

3.

The Ratepayers’ Alliance is New Zealand’s largest ratepayer group, enjoying some 16,000 subscribed members. We champion prudent fiscal management of our Super City: reasonable rates and sensible spending. The Ratepayers’ Alliance seek an end to Auckland Council's persistent rate hikes and culture of wasteful spending.

General comments

4.

Having reviewed the consultation documents on the Budget, this submission will go through the ‘issues’ which the document highlighted for consultation, and make additional comments on the proposed Budget.

5.

We are, frankly, astonished that the consultation material appears to rule-out rate increases of less than 2%.

This is extraordinary in light of average residential rate hikes of 9.9% only two years ago. The increasing of the rates burden many times the rate of inflation is excessive and needs to stop.

6.

Until such a time as Aucklanders can trust the Council to be responsible with our money, we do not support any rate increase in excess of inflation. Before rate increases are exercised, the Council needs to show that it values ratepayer dollars as much as those ratepayers who earned them.

7.

Quite simply, this Council cannot credibly claim that rate hikes will go toward the purpose of better infrastructure. We saw this with the implementation of the transport levy. According to the CEO of Auckland

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Transport, after the levy was introduced, there was a reduction in capital expenditure on transport. In other words, Aucklanders were lied to.

8.

The consultation papers fail to show that the Council has taken any meaningful steps in the preparation of the Budget to cut wasteful spending. Instead, all efforts appear to be directed at finding new ways to increase the Council’s tax burden on Aucklanders and increase spending. If the Council takes all forms of current spending for granted, then rates will never plateau or fall. Where are the spending reviews talked about during last year’s election campaign?

9.

The Council has attempted to shift the terms of the debate to ‘how much’ new spending and ‘how much’ rate hikes should be. The debate should be around whether there is justification for any rate increase at all.

10.

Despite our primary submission that rates increases cannot be greater than inflation, the Ratepayers’ Alliance’s alternative submission is that this Council is accountable to its voters to ensure any increase in rates cannot be higher than 2.0%.

11.

As outlined below, we are also opposed to the adoption of a living wage because the consequences of such a policy will not meet the intended objectives.

Issue 1 – rates increases

12. As outlined above, our primary submission is that rates should not be increased above the rate of inflation until such time as Auckland Council can prove it can be trusted with our money.

13.

In the alternative, we submit that the Council should adopt Option C – imposing a 2.0% average rates increase. With so many Councillors bound by their pre-election commitments to keep average rates and compulsory user charge increases no higher than 2.0%, cutting wasteful expenditure and more prudent fiscal management is necessary for the Council to be able to deliver on its capital programme.

14.

During the election campaign, the Ratepayers’ Alliance lobbied candidates to sign its Ratepayer Protection Pledge.1 Those Councillors are prevented from voting for any measures which increases the total average burden of rates, levies, and other compulsory Council charges, to more than 2% per annum.

1

Out of the 20 current Councillors, 9 have signed the Auckland Ratepayers’ Alliance’s Ratepayer Protection Pledge, and 1 has signed a similar pledge made by Auckland Future. This Council therefore has a mandate to ensure any increase remains below 2.0%. See http://www.ratepayers.nz/we_did_it for more information on the election commitments of the current Council.

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15.

Of course 2% is a maximum. We are happy to work with Councillors or officials to identify potential areas of savings.

16.

In the event of any of the following Councillors breach the pledge, we will be ensuring that our members and the public know very well who breached their word.

Issue 2 – rating stability

17. Ultimately it is the citizens of Auckland who pay rates, regardless of the residential/commercial rates differential. We are advised that there is no economic justification for the commercial rates differential.

Issue 3 – paying for tourism promotion

18. Unless targeted tourism provider rates are accompanied with equal decreases in residential rates, then none of the options are appropriate.

19.

We reject the premise of the consultation documents that tourism promotion – or at least the extent of the current spending by the Council’s tourism promotion agency – is necessary or justified.

20.

Where is the evidence that the costs (including the deadweight loss) caused by the additional rates on Auckland property owners are less than the apparent economic benefits of having ATEED officials going to Olympic games and other major events around the world? We have asked for this: some sort of disciplined economic analysis which would demonstrate that ratepayers receive value for money. To date, the Council has been unable to provide any such evidence.

21.

It speaks volumes that even the hotels and lobbyists for the accommodation sector, the sector which in theory benefits the most from ATEED, have questioned the necessity of the spending.

22.

In principle, targeted rates are fairer and focus rates on those who receive the most benefit. However, the proposal to target rates at accommodation providers made in this consultation document does not generate savings for general ratepayers. Instead of contributing toward future reductions in rate rises, the proposal would simply free up an extra $250-$300 million for spending. The proposal appears to be in breach of the Ratepayer Protection Pledge.

Issue 4 – paying for housing infrastructure

23. We don’t have a view on this issue, so long as the Ratepayer Protection Pledge is adhered to (i.e. additional charges are compensated by cuts in other areas).

Issue 5 – paying council staff a living wage

24. We submit that the Council should adopt option A – continue with current pay policies.

25.

Our sister organisation, the New Zealand Taxpayers’ Union has produced a report (attached to this submission) on the consequences of Wellington City Council implementing the living wage, titled: Best of Intentions, Worst of Results. The report shows that 17 parking wardens lost their job as a result of the living wage policy. The report’s author, Jim Rose, is available to submit orally to the Council is requested.

26.

For these reasons, we submit that the Council should continue with their current pay policies. (a)

A living wage hurts most the people it is intended to help. Lower-skilled workers are crowded out of the market by higher-skilled candidates attracted by the higher wage.

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27.

(b)

The burden of these higher wages is passed onto ratepayers and business owners. The Council is not subject to market competition and the higher costs are simply taken from general rates. It would be unjust to shift the burden of these higher costs on to ratepayers who themselves may be on a wage lower than the living wage.

(c)

There is no consensus on the calculation of the living wage. Unlike a market-rate, the living wage is entirely politically subjective.

(d)

Up to 40% of any living wage earnings increase will be abated by a reduction in government transfers and increased income tax obligations.

(e)

Along with this, there are the obvious risks and potential for litigation in breaching the Local Government Act. It is common knowledge that the Auckland Chamber of Commerce is opposed to such a policy, and there may be threats of legal action, as experienced by Wellington City Council.

Thank you for providing us with the opportunity to submit on this proposed Budget.

Yours sincerely, Auckland Ratepayers’ Alliance

Jordan Williams Executive Director Jordan.Williams@ratepayers.org.nz Mobile: 021 762 542

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