City residents warned of big rates rise

Carmen Houlahan
Carmen Houlahan
Dunedin residents have been warned to prepare for a big rates rise.

"I’d say to the public ‘get ready’," Dunedin city councillor Carmen Houlahan said at a meeting yesterday.

"You’re not going to like it.

"None of us are going to like it, but it’s going to be a higher rate than what anyone would want."

Cr Jim O’Malley also signalled a large rates increase was on the cards, though not quite as big as has been projected for other cities.

The Dunedin City Council was bringing in an upgraded rubbish and recycling kerbside collection service from July, but it had got on to necessary Three Waters spending earlier than other councils, he said.

The city council has not yet publicly signalled the order of rates increase that might be proposed for 2024-25, but other councils have talked of double-digit rates rises.

Wellington residents could face "around 14%-16%", Christchurch residents about 13.3% and Hamilton ratepayers as much as 25.5%, their city councils said late last year.

Councils across the country face immense challenges getting their Three Waters networks up to scratch and adapting to stricter water regulations, as well as dealing with constrained national transport funding and cost pressures in general.

The city council was yesterday discussing financial assumptions for its draft 2024-34 long-term plan, including about inflation and expected interest rates on borrowing.

Cr Houlahan referred to the cost-of-living crisis, which affected both councils and households.

"Things are looking tough," she said.

"However, it’s not going to last forever. It’s a cycle and we will get through this."

The city council has signalled capital spending of $2billion could be needed across the next decade, which would be an increase of $500million on what was allocated in the 2021-31 long-term plan.

Half of the capital expenditure could be for Three Waters, as the council looks to repair, renew or upgrade ageing infrastructure.

"We are seeing budgets that are higher and that flows through, and it’s going to have an impact on rates — there’s no doubt about it," Cr Houlahan said.

"Every other council in the country is facing this."

Dunedin Mayor Jules Radich said purchasing power had been eroded.

The council needed to get on with Three Waters improvements, he said.

"The biggest question is how we will fund it on an ongoing basis."

Discussions were required with the government about this, he said.

Cr O’Malley cautioned the city council against deferring work that needed to be done.

"If we pull back now, we could create problems for the future," he said.

Cr O’Malley noted Dunedin’s Forsyth Barr Stadium, which opened in 2011, had cost about $300m to build and a new proposed stadium of the same size in Christchurch had been quoted at $680m.

The Dunedin City Council was dealing with the ramifications of previous councils deferring work, Cr O’Malley said.

A report by Berl had indicated that supply chain constraints were starting to pass and inflation overseas had begun to drop, Cr O’Malley said.

"It’s going to be a tough budget, but I think we can get through it."

Cr Lee Vandervis tried to make the point inflation was not a legitimate argument for getting on with work more quickly, because if the cost of a project rose 2.5% a year, the value of the money diminished, he said.

Cr Vandervis doubted the council could afford to maintain levels of service provided in the past.

The council was looking at a debt level "that utterly constrains what we hope to do".