Just announced! Auckland mayor reveals next year’s council rates increase. Can your wallet cope?

Auckland mayor announces proposed council rates increase

 

Living costs remain stubbornly high, with annual inflation rising to 7.2%, and now another announcement could leave your wallet even lighter.

 

Auckland’s mayor promised to keep council rates low during the cost-of-living crisis, but today proposed an increase well above the figure he had previously suggested.

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On Monday, Auckland Mayor Wayne Brown announced a budget proposal that would increase Aucklanders’ council rates by 4.66%.

 

This would push homeowners’ council rates higher. An Auckland household with a property worth NZ$1,400,000, for example, would pay an average of NZ$154 more a year, equivalent to around NZ$3 extra a week.

 

 

Wayne Brown revealed that he was proposing a 7% increase in general rates, well above the 3.5% he had previously suggested. Reductions in some targeted rates would offset part of the rise, bringing the average overall increase in household council rates to 4.6%. He said this was the first time an Auckland mayor had proposed a council rates increase below inflation.

 

Behind the council rates increase is Auckland Council’s growing budget shortfall.

 

Rising costs caused by inflation had previously revealed a NZ$295,000,000 hole in Auckland Council’s budget, far exceeding the expected shortfall of NZ$90,000,000 to NZ$150,000,000. Such a funding gap could send council rates soaring by 13%, but Brown said he would not let that happen.

 

Brown said: “My proposal will reduce council rates in real terms, help the nationwide fight against inflation, support Auckland households through the pain of this cost-of-living crisis, and help protect the essential services Aucklanders value.”

 

 

To balance households’ cost-of-living pressures against the council’s financial shortfall, the mayor has explored every available option. His measures also include cost savings, asset sales, efficiency improvements and potentially borrowing.

 

He said his proposed budget aimed to save NZ$130,000,000 across Auckland Council and council-controlled organisations, including Auckland Transport, Tataki Auckland Unlimited and Eke Panuku Development Auckland. To support Brown’s low council rates increase, local boards have been asked to cut costs by 5% from their annual funding of NZ$298,000,000. The mayor also proposed selling the council’s majority stake of 18% in Auckland Airport, which would raise NZ$2,000,000,000 for Auckland.

 

The 2023/24 budget proposal will go before a Governing Body meeting on 15 December, with consultation to take place next year.

 

A quarter of New Zealand households face a crisis

 

Rising council rates are just one of the many difficulties New Zealand households currently face.

 

A recent study found that a quarter of New Zealand households could not cope with an unexpected large bill, while more than a third wanted to save more but found it very difficult.

 

A survey by Payments NZ, a company responsible for managing transfers worth trillions of New Zealand dollars each year between consumers, businesses and banks, found that many New Zealand households were barely making ends meet, were poorly prepared for financial shocks and were struggling to save for the future.

 

 

Meanwhile, a new report from the Financial Services Council (FSC) found that as many as 40% of respondents could not come up with NZ$5000 in the event of an unexpected shock. The report also showed that many people had little or no insurance cover for emergencies or difficult circumstances.

 

FSC chief executive Richard Klipin said many people had yet to experience a serious financial shock from high inflation and interest rates, but the coming year would be tougher. The Reserve Bank could continue raising interest rates, and inflation could also rise. “The latest findings are concerning and reflect the importance of thinking about our finances over the long term.”

 

Good news: could fuel tax relief be extended?

 

With many people struggling, the Government has not stood idly by. Finance Minister Grant Robertson said the Government was still considering whether to extend the fuel excise tax reduction as concerns about inflationary pressures intensified.

 

In March this year, the Government announced a fuel excise tax reduction to help people cope with the cost-of-living crisis. It subsequently extended the relief, before announcing at the end of September this year that it would end in January next year.

 

However, in an interview this morning (5 December), Robertson said a decision on extending the fuel excise tax reduction would be made “soon”, before Christmas, while warning that any extension would be brief.

 

 

“We will make a judgement soon on whether we think it can be extended, but if it is, it won’t be for very long. Ultimately, over the long term, we need to spend money on things New Zealanders really want and need, such as good roads and public transport.”

 

“Cabinet has not made that decision yet. We have consistently said we would look at economic conditions first and then decide.”

 

“But we are acutely aware that cutting fuel excise tax actually helps bring inflation down, because fuel makes up such a large share of the CPI. In effect, what we are doing is containing inflation.”