Warning of 20% rates hike for Dunedin

Cr Lee Vandervis. Photo: ODT files
Cr Lee Vandervis. Photo: ODT files
A Dunedin city councillor has warned ratepayers could face a 20% rates rise while council debt climbs and another deficit looms.

Cr Lee Vandervis painted a grim financial picture at a Dunedin City Council meeting yesterday and he urged his colleagues to halt growth in spending and any increases in service levels.

His stance was not supported by other councillors who spoke at the meeting and Cr Jim O’Malley was one who argued the city required investment.

"If you don’t spend now, and postpone something that needs to be done ... you’re just putting it off for someone else to do," Cr O’Malley said.

The council has yet to produce a figure for what level of rates increase could be proposed.

However, other councils have talked of double-digit rises because of the level of spending that will be needed for Three Waters networks and dealing with other cost pressures.

City councillor Carmen Houlahan last month warned of "a higher rate than what anyone would want" and Cr O’Malley also signalled a large increase was on the cards, though not quite as big as had been projected for other cities.

Cr Vandervis, chairman of the council’s finance and council-controlled organisations committee, railed against what he described as a debt crisis that was getting worse.

Interest on group debt was running at $1 million a week and was budgeted to increase to $1.5m a week within two years, he said.

The council approved an unbalanced budget last year, because of the way it chose to account for depreciation on Three Waters assets amid uncertainty in that sector.

Cr Vandervis said the council was again headed for an unbalanced budget and it would need to raise rates "by something like 35%" to avoid this.

The alternative involved pushing up borrowing, which would help "bring our rates increase down to something near 20%", he said.

Cr Vandervis had his own remedy.

"No more new cycleways, no more new boardwalks, no new peninsula road widening ... no more park-and-ride projects ... no new water treatment projects, no new toilets, no new traffic diversions, or anything else, until we can flatten the debt curve."

Cr O’Malley said the council was facing a predicament partly created by previous decision-makers who had kept rates low and not invested adequately in the future.

Cr O’Malley rejected spending decisions being characterised as vanity projects.

"A reckoning is coming, but not facing the reckoning is irresponsible and the least resilient thing you can do for your city."

Cr Steve Walker thanked Cr Vandervis for his "recidivist speech" and said the council could not place an unfair burden on future generations by failing to invest.

Cr Christine Garey said the council was not alone in facing Three Waters challenges.

Cr David Benson-Pope said the council was operating well within its targets for interest as a percentage of rating revenue, interest as a percentage of total revenue and debt as a percentage of annualised revenue.