Amicus Curiae: The Budget bites back – repercussions of the new 10-year plan for Auckland

Eugenia Woo, Leading Contributor

The last time a budget attracted public attention and scrutiny from Aucklanders, it was to do with concerns about crime and justice investment. However, the matter that has brought Mayor Len Brown’s 10-year budget for Auckland into the spotlight is to do with the rates increases for property owners that will accompany this long-term plan. The budget was approved by a narrow margin of votes in late July, and will involve $60 billion of spending over the next decade. Accompanying this expenditure, however, will be a 9.9% rate increase on average for households from July.

There has been some debate around whether or not the increase in rates has been necessary. The reason given for the rates increase has been that the money will go to covering transport costs and projects related to making Auckland transport more efficient. Auckland Chamber of Commerce chief executive Michael Barnett has been vocal in his call for transparency around the rates increase, specifically seeking a review of the Auckland Council’s operating costs as well as noting that ratepayers should be given evidence of how the transport targeted rate they are subject to will assist with improving matters such as traffic congestion. Besides the transport targeted rate that is specific to the Auckland budget, a variety of other contributing issues including the shift to a single rating system for the city means that more households than initially expected have rates either substantially higher or lower than the average. Before the release of these figures there were as many as 118,000 households that could expect a rates decrease. However, that figure has now been halved.

The overall rates increase is an unwelcome sight for homeowners, but for some this may prove to be unmanageable and not just a mere annoyance. Some of the low-income neighbourhoods in Auckland such as Mangere and Otahuhu are facing an average rates rise of 16.9% this year, or more than $300, and are being ultimately disadvantaged the most as a result of this. The Auckland Council seems to be taking a stronger stance on enforcing rates payments in the wake of the budget’s implementation, with its evaluation of a number of properties currently meeting the criteria for forced sale due to significant rates arrears. One affected homeowner is Charlotte Hareta Marsh, whose home was sold at a High Court-ordered auction on Wednesday after a failure to pay rates to the Auckland Council. Her house is the first property to receive this treatment this year and also the first forced sale to be conducted under the Local Government (Rating) Act 2002, with the Council pursuing another 8 more rates arrears cases which may be resolved in the same way. Auckland Council’s chief financial officer Sue Tindal has stated that the mortgagee process was a last resort, and that Ms March’s particular case was not an affordability issue, but an issue of a ratepayer “refusing to acknowledge Auckland Council as a statutory authority”. Ms March had been paying her rates to an unregistered Maori authority named Arikinui o Tuhoe, who has said that a caveat had been registered over the property with the High Court, though the sale eventually did go ahead.

While the case of Ms March may in fact not be due to issues of affordability, there is no doubt that the forced sale of properties because of an inability to pay rates is an issue that is very real for homeowners. With the rates increase looking like it is here to stay, it is likely that homeowners in poorer areas of Auckland will be hit the hardest, and risk falling into a cycle where they are unable to make their payments.

The fact remains that there may also be other homeowners in Ms March’s position, who have been paying rates to authorities other than the Council, which makes Mr Barnett’s point about transparency even more important. If homeowners are not being advised adequately of who to pay rates to, and the importance of that process, then perhaps with these recent rate increases there should also be a corresponding increase in the availability of information around rates and around property ownership for those affected.

There is no doubt that there has been a deficit in the transport budget that has to be remedied, and fixing this as the 10-year budget has tried to do should in theory benefit the Super City. However, asking struggling homeowners to bear the cost of the lack of previous government expenditure has clear implications, and few of them are good.

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