In the Mayor's message to ratepayers accompanying the Auckland Council 2012-2022 Long Term Plan, he writes"...properties in Takapuna will be rated the same as those in Titirangi and those in Takanini...". It is clearly the assumption of Auckland Council that this is right and fair.
But it is anything but fair.
Rates are a blunt instrument, but that does not justify using the instrument in a blunt way, as Council is doing.
Council has received numerous submissions about this. Many supporting its proposal and many opposing it. Some will say, "oh well, we must've got it right because about the same number like it as hate it...". That is a lazy idea. There are always winners and losers in any change in rates. But just because one group is about the same size as another group does not make it fair.
Fact: Properties in older and more established parts of Auckland have quite reasonably paid less rates in the dollar compared with similarly valued properties in newer parts of Auckland. For example, Auckland City Council charged residential ratepayers a General Rate of $0.0342 in the dollar, for the year ended June 2011, while its newer counterpart, Manukau City Council charged $0.0374 in the dollar. (NB: Both Councils used the same Annual Value valuation system as the basis for rates calculations.) Thus Manukau City Council needed to charge ratepayers living in $400,000 houses 9% more than Auckland City Council. Both Councils had balanced budgets. Both councils met the needs of ratepayers. Yet under the new Auckland Council's new "fair" system, unless less public work is done than planned in Manukau, Auckland City ratepayers will be contributing to the cost of Manukau public works.
Fact: Newer parts of Auckland cost more for public infrastructure services than old established parts of Auckland - which is why it is reasonable for newer parts of Auckland to pay more in rates. For example, newer parts of Auckland have new roads to build and kerb and channel, new parks to buy, new community services to build, new stormwater systems to install. Whereas older established parts of Auckland already have that infrastructure in place, needing to be maintained but not built from scratch, paid for by rates in the past, and that value now capitalised in the higher land value. Example. Take Franklin District Council's rates for the year ended June 2011. It had a General Rate of $0.000563 in the dollar, a separate Transport rate of $0.000719 in the dollar (the largest component - reflecting the cost of building new roads), and even a stormwater uniform charge of $72/property. This reflects that district's early path in the urban evolution cycle - and it's rating system and costs reflect that.
Fact: Auckland consists of many different parts that are at different stages of the urban development cycle with different public services needs and incurring different public service costs. It is unreasonable and unfair to now presume that it is fair that "properties in Takapuna will be rated the same as those in Titirangi and those in Takanini...."
Monday, July 9, 2012
All $400,000 houses are not the same
In the Mayor's message to ratepayers accompanying the Auckland Council 2012-2022 Long Term Plan, he writes"...properties in Takapuna will be rated the same as those in Titirangi and those in Takanini...". It is clearly the assumption of Auckland Council that this is right and fair.
But it is anything but fair.
Rates are a blunt instrument, but that does not justify using the instrument in a blunt way, as Council is doing.
Council has received numerous submissions about this. Many supporting its proposal and many opposing it. Some will say, "oh well, we must've got it right because about the same number like it as hate it...". That is a lazy idea. There are always winners and losers in any change in rates. But just because one group is about the same size as another group does not make it fair.
Fact: Properties in older and more established parts of Auckland have quite reasonably paid less rates in the dollar compared with similarly valued properties in newer parts of Auckland. For example, Auckland City Council charged residential ratepayers a General Rate of $0.0342 in the dollar, for the year ended June 2011, while its newer counterpart, Manukau City Council charged $0.0374 in the dollar. (NB: Both Councils used the same Annual Value valuation system as the basis for rates calculations.) Thus Manukau City Council needed to charge ratepayers living in $400,000 houses 9% more than Auckland City Council. Both Councils had balanced budgets. Both councils met the needs of ratepayers. Yet under the new Auckland Council's new "fair" system, unless less public work is done than planned in Manukau, Auckland City ratepayers will be contributing to the cost of Manukau public works.
Fact: Newer parts of Auckland cost more for public infrastructure services than old established parts of Auckland - which is why it is reasonable for newer parts of Auckland to pay more in rates. For example, newer parts of Auckland have new roads to build and kerb and channel, new parks to buy, new community services to build, new stormwater systems to install. Whereas older established parts of Auckland already have that infrastructure in place, needing to be maintained but not built from scratch, paid for by rates in the past, and that value now capitalised in the higher land value. Example. Take Franklin District Council's rates for the year ended June 2011. It had a General Rate of $0.000563 in the dollar, a separate Transport rate of $0.000719 in the dollar (the largest component - reflecting the cost of building new roads), and even a stormwater uniform charge of $72/property. This reflects that district's early path in the urban evolution cycle - and it's rating system and costs reflect that.
Fact: Auckland consists of many different parts that are at different stages of the urban development cycle with different public services needs and incurring different public service costs. It is unreasonable and unfair to now presume that it is fair that "properties in Takapuna will be rated the same as those in Titirangi and those in Takanini...."
But it is anything but fair.
Rates are a blunt instrument, but that does not justify using the instrument in a blunt way, as Council is doing.
Council has received numerous submissions about this. Many supporting its proposal and many opposing it. Some will say, "oh well, we must've got it right because about the same number like it as hate it...". That is a lazy idea. There are always winners and losers in any change in rates. But just because one group is about the same size as another group does not make it fair.
Fact: Properties in older and more established parts of Auckland have quite reasonably paid less rates in the dollar compared with similarly valued properties in newer parts of Auckland. For example, Auckland City Council charged residential ratepayers a General Rate of $0.0342 in the dollar, for the year ended June 2011, while its newer counterpart, Manukau City Council charged $0.0374 in the dollar. (NB: Both Councils used the same Annual Value valuation system as the basis for rates calculations.) Thus Manukau City Council needed to charge ratepayers living in $400,000 houses 9% more than Auckland City Council. Both Councils had balanced budgets. Both councils met the needs of ratepayers. Yet under the new Auckland Council's new "fair" system, unless less public work is done than planned in Manukau, Auckland City ratepayers will be contributing to the cost of Manukau public works.
Fact: Newer parts of Auckland cost more for public infrastructure services than old established parts of Auckland - which is why it is reasonable for newer parts of Auckland to pay more in rates. For example, newer parts of Auckland have new roads to build and kerb and channel, new parks to buy, new community services to build, new stormwater systems to install. Whereas older established parts of Auckland already have that infrastructure in place, needing to be maintained but not built from scratch, paid for by rates in the past, and that value now capitalised in the higher land value. Example. Take Franklin District Council's rates for the year ended June 2011. It had a General Rate of $0.000563 in the dollar, a separate Transport rate of $0.000719 in the dollar (the largest component - reflecting the cost of building new roads), and even a stormwater uniform charge of $72/property. This reflects that district's early path in the urban evolution cycle - and it's rating system and costs reflect that.
Fact: Auckland consists of many different parts that are at different stages of the urban development cycle with different public services needs and incurring different public service costs. It is unreasonable and unfair to now presume that it is fair that "properties in Takapuna will be rated the same as those in Titirangi and those in Takanini...."
4 comments:
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I see what you mean but isn't it important to the wellbeing of the people living in the older parts of town that those newer suburbs are created? Because otherwise house prices and rents in the older parts of town will soar as more and more pressure goes on the existing housing stock. It is the same with transport infrastructure - people in the older, more central suburbs will benefit from better public transport on the periphery because it will stop air pollution and congestion from those coming from the periphery into the centre getting worse. so why shouldn't they subsidize new development?
I suppose you could also argue that new developments don't benefit residents in the older parts of town except in the sense that they make Auckland grow. Hypothetically if the council didn't develop any new areas Auckland would just stop growing but I feel like it would take a while to get to that point and in the meantime there would be lots of over-crowding, hardship due to high house prices etc. -
July 9, 2012 at 2:07 PM
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Good comment. But there are two questions process. First - should the rating system be the tool for this? And if it is - shouldn't the ratepayers be asked whether they support it? (If they benefit from new development - and it is demonstrated - then if there is a mandate Council does not need to manipulate rates to subsidise.)
And there is the bigger matter - new development has been happening without this subsidy, and development levies have been applied so that new development paid for the cost of its infrastructure (ie not subsidised as was the case before Developer Levies were enabled by legislation).
Regarding pollution and congestion - those in older suburbs are usually very close to work, and can walk - congestion is less of a problem for them. Air pollution tends to afflict newer parts of Auckland in hollows and basins (like Albany and Upper Harbour).
I am not opposed to new development. However it should pay its way. The true costs without subsidy. A benefit of this is to drive investment into medium density/compact housing redevelopment of older parts of Auckland (where there is useful infrastructure capacity already in existence.) -
July 9, 2012 at 2:30 PM
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Manukau had a higher UAGC than Auckland.
Auckland did not properly maintain its infrastructure and continually deferred maintenance instead of increasing rates.
Now we all pay for those deferred costs. -
July 9, 2012 at 11:15 PM
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Manukau had a higher UAGC and a higher rate in the dollar. That only adds to the point I am making, that Auckland Council's rating system puts in place an unjustified subsidy - where established properties subsidise newly establishing properties.
Manukau City's UAGC was $365/residential ratepayer for the year ended June 2011, while Auckland City's UAGC was $268. On both scores Manukau residential ratepayers paid more than Auckland ratepayers. Now they pay the same. That change has not been justified.
It may be that Auckland deferred maintaining its pipe infrastructure, but now sewers are done by Watercare (and paid for out of its separate sewer rate/charge), and as has been publicly stated the budget in Auckland Council's Plan for stormwater is miniscule. That deferral continues. -
July 10, 2012 at 10:11 AM
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4 comments:
I see what you mean but isn't it important to the wellbeing of the people living in the older parts of town that those newer suburbs are created? Because otherwise house prices and rents in the older parts of town will soar as more and more pressure goes on the existing housing stock. It is the same with transport infrastructure - people in the older, more central suburbs will benefit from better public transport on the periphery because it will stop air pollution and congestion from those coming from the periphery into the centre getting worse. so why shouldn't they subsidize new development?
I suppose you could also argue that new developments don't benefit residents in the older parts of town except in the sense that they make Auckland grow. Hypothetically if the council didn't develop any new areas Auckland would just stop growing but I feel like it would take a while to get to that point and in the meantime there would be lots of over-crowding, hardship due to high house prices etc.
Good comment. But there are two questions process. First - should the rating system be the tool for this? And if it is - shouldn't the ratepayers be asked whether they support it? (If they benefit from new development - and it is demonstrated - then if there is a mandate Council does not need to manipulate rates to subsidise.)
And there is the bigger matter - new development has been happening without this subsidy, and development levies have been applied so that new development paid for the cost of its infrastructure (ie not subsidised as was the case before Developer Levies were enabled by legislation).
Regarding pollution and congestion - those in older suburbs are usually very close to work, and can walk - congestion is less of a problem for them. Air pollution tends to afflict newer parts of Auckland in hollows and basins (like Albany and Upper Harbour).
I am not opposed to new development. However it should pay its way. The true costs without subsidy. A benefit of this is to drive investment into medium density/compact housing redevelopment of older parts of Auckland (where there is useful infrastructure capacity already in existence.)
Manukau had a higher UAGC than Auckland.
Auckland did not properly maintain its infrastructure and continually deferred maintenance instead of increasing rates.
Now we all pay for those deferred costs.
Manukau had a higher UAGC and a higher rate in the dollar. That only adds to the point I am making, that Auckland Council's rating system puts in place an unjustified subsidy - where established properties subsidise newly establishing properties.
Manukau City's UAGC was $365/residential ratepayer for the year ended June 2011, while Auckland City's UAGC was $268. On both scores Manukau residential ratepayers paid more than Auckland ratepayers. Now they pay the same. That change has not been justified.
It may be that Auckland deferred maintaining its pipe infrastructure, but now sewers are done by Watercare (and paid for out of its separate sewer rate/charge), and as has been publicly stated the budget in Auckland Council's Plan for stormwater is miniscule. That deferral continues.
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