Affordable Auckland is committed to freezing rates charged by Council for the next three year term.
Currently 24% of Councils funding come from rates charged as a percentage of property value as determined by Auckland Council and we see this as being unfair. A high value property in Orakei does not use the same value of services as a low income property in Manukau so it is not fair to charge property owners on that basis. We will be advocates to Central government of giving Council greater ability to decide how it charges for services so we are not constrained by the requirement to use property taxes. We will also seek to keep rates lower by taking steps to arrest house price inflation; continually increasing house values mean the amount you pay in rates will continue to increase even if the level of rates charged by Council is frozen.
Affordable Auckland will explore other options for funding Council services such as increasing the Uniform Annual General Charge. This is a flat rate charged to all property owners which would see a more equitable funding of services because a greater number of people would be paying the same amount.
Where practical we would introduce greater user pays for Council services. Nothing could be fairer than paying for the services that you do use, while paying nothing for the services you do not. A user pays regime rewards responsible consumption and penalises waste.
Quality Spending on Core Services
Prior to 2002, Councils had a clear expectation of the goods and services it existed to fund. Following new legislation allowing ‘general competence’, local bodies were granted the ability to fund what they felt was appropriate. This has resulted in increased duplication of local and central government functions which Affordable Auckland sees as being inefficient.
The council’s financial situation is so grim that we need to be dividing funding ideas into ‘must haves’ and ‘nice to haves.’ Right now only those concepts which are clearly ‘must haves’ should continue to be funded by the Council. We would put areas such as managing storm water and sewerage, street lighting, maintaining footpaths and parks into the ‘must haves.’ Providing grants to festivals, public art, subsidising events are clearly ‘nice to haves’ and not currently affordable for our council.
Affordable Auckland is committed to only funding the core services explicity require under Section 11A of the Local Government Act
While some other candidates are talking vaguely about finding efficiencies and cutting waste they have no pointed to concrete examples of how they would do this. Phil Goff says that he will eliminate duplication, without mentioning council employment schemes, social schemes and education schemes which duplicate functions already be operated by central government.
It is legitimate for the Council to borrow money to fund essential capital infrastructure investment but it should be carefully considered and sustainable. Currently 19% of rates income is spent servicing the interest on Council debt.
Examples of when it is appropriate to borrow include linking infrastructure up to new developments. New properties will result in new rates income for the Council so it is completely legitimate to borrow to fund infrastructure connections but when the Council gets the increased income, that should be spent on reducing our debt.
The current hyper-inflation in house prices is a result of regulatory distortion altering normal market behaviours.
The tired cliché is that there is no silver bullet to fixing the housing crisis. That is true, but the most effective step that can be taken is to be increase supply. Affordable Auckland advocates abolishing the Rural Urban Boundary to open up the land available for residential development. Land prices make up 60% of the cost of a property so reducing these levels is clearly the most powerful thing council can do. The Productivity Commission 2012 report on Housing unaffordability demonstrated the 2010 price of land 2km outside the Metropolitan Urban was 8.65 times the price of land 2km inside the Metropolitan Urban Limit. Those figures demonstrate unquestionably that the current council direction is completely wrong.
There are some areas where the Council is constrained by the vague principles of the Resource Management Act but where possible Affordable Auckland believes the protection of private property rights should be the primary goal in determining zoning policies. By this we mean that if the activities of one property owner (i.e. painting their houses or altering landscape) do not affect a neighbouring property then the action should not be prohibited by zoning rules. Len Brown has publicly stated that the average cost of obtaining resource consent is $30,000 per house. The costs of obtaining permission to develop will only be passed on to the end purchaser meaning grater inflationary pressure on house prices.
Making housing affordable is the essential second prong of keeping rates low because rates are charged as a percentage of property value. This means that even if the rate charged by Council is frozen for three years, your rates can still increase if the value of your property increases. Unless you have been living in the same property for the last two decades and are planning on selling up and leaving Auckland, an artificially high property value does not make you practically wealthier. It increases the cost of the rates you pay, while getting no increase in services. It also means that if you do sell your property and stay in Auckland you will then purchase another property which is artificially over-valued.
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