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The Dunedin City Council will explore ways to ease the burden on low-income households as the prospect of a 6.5% rates rise looms.
But a push by Cr Lee Vandervis to also ease the burden on the city’s commercial sector — by shifting the burden for millions of dollars worth of council revenue back on to the residential sector — failed to win support.
The moves came as councillors met yesterday to consider what to include in the council’s 2020-21 draft annual plan, before public consultation.
The pre-draft budget includes a 6.5% rates increase, fuelled in part the need to offset a $3.5million drop in operating surplus at the Green Island landfill.
The rates increase was also fuelled by an extra $5.3million in depreciation costs, and plans to add 27 new fulltime-equivalent staff, among other costs.
The extra staff would add $4.8million (or 7.4%) to the council’s staff costs, but many were needed to tackle work associated with city growth, council chief executive Sue Bidrose said yesterday.
Others, such as building consent officers, would generate their own revenue for the council, she said.
The wider budget likewise reflected the demands placed on the council to cater for growth in Dunedin, Dr Bidrose said.
But she also sounded a note of caution, saying last year’s property revaluations in Dunedin shifted more burden for rates revenue on to the city’s lower value properties.
Some lower-value parts of the city had seen the biggest increases in valuations, and some households in those areas would face a larger proportion of the 6.5% rates increase, she said.
Mayor Aaron Hawkins responded by seeking a report with options to shift that balance back, by making greater use of general residential rates — rather than fixed charges — in future.
At present, residential rates were delivered through both mechanisms, but general rates — calculated based on property values — provided the best way to charge those with the greatest ability to pay, he argued.
Fixed charges were ‘‘inherently regressive’’, hitting lowest-income people the hardest, he believed.
Councillors voted unanimously to support Mr Hawkins’ move, although Cr Vandervis then argued the council should make another change.
He proposed reducing the burden on commercial ratepayers — thereby shifting more on to the residential sector — to encourage the city’s economy to ‘‘thrive’’.
At present, the council charged commercial ratepayers more than residential ones, based on a differential of 2.5.
That compared unfavourably with Christchurch (1.66) and Invercargill (1), but favourably with Auckland (2.74) and Hamilton (2.569).
Cr Vandervis proposed reducing Dunedin’s differential to 1.66, to compete with Christchurch, while arguing the change would be offset by extra investment, economic growth, new businesses and jobs.
Cr David Benson-Pope rejected the ‘‘simplistic claptrap’’, before being forced to apologise, but maintained shifting more of the burden on to the residential sector was ‘‘just ridiculous’’.
Councillors rejected the idea 12-2, only Cr Doug Hall supporting Cr Vandervis, and instead voted to seek a report on all property category differentials for next year’s long-term plan hearing.
Earlier, a push by Cr Vandervis — supported by Cr Jules Radich — to cap the council’s increased staff costs at 3% was also voted down, 12-2.