ORC to consider 21.3% rates rise

Photo: Supplied
Photo: Supplied
The Otago Regional Council will consider a potential 21.3% rates rise for the coming year.

That rates hike would follow three consecutive years of significant rates rises.

Councillors who agonised over the past increases approved them as the organisation grew in size to meet the demands of central government.

Now, fully funding the year’s operating costs and paying off existing public transport debt sooner rather than later had driven the council over a self-imposed rates increase limit, a report to councillors said.

"Council is aiming to limit total rates increases to 10% in any year of the long-term plan", the report said. "This target is not being achieved in years 1 to 3 due to the public transport rates."

Councillors will tomorrow firm up what the regional council takes to Otago communities when consulting on its long-term plan late next month.

The draft financial strategy to be discussed at the meeting said total rates increases would be 21.3% in year 1 of the plan, 15.7% in year 2, and 14.8% in year 3.

"Excluding public transport, rate increases over years 1 to 3 will be 10.3%, 11.6% and 7.3% respectively."

Twelve months ago, then-council interim chief executive Pim Borren said successive rates rises of 48.5%, 18% and 18% were directly linked to the council establishing itself as a fit-for-purpose organisation on par with other regional councils in New Zealand.

In future the council should be looking at much more normal increases, Dr Borren said at the time.

Yesterday, Cr Andrew Noone said in hindsight Dr Borren’s comments were a little premature.

"We’re still not quite there in terms of being fit for purpose", Cr Noone said.

Council scrutiny of its long-term plan process had exposed areas where the organisation was "still underdone to deliver on our stakeholders’ expectations".

The council’s transport reserve had a historic deficit, "plus in more recent years the influence of bringing bus driver wages from $22 to $30 per hour mid-year has created an unbudgeted issue we cannot ignore", he said.

Cr Tim Mepham said councillors were considering "a bunch of different options".

The long-term plan process required public consultation and so the rates increase was up for debate, Cr Mepham said.

"We will know where we are heading with this after our meetings this week", he said.

The council had been working hard to create a "bare bones, business as usual" plan, chairwoman Cr Gretchen Robertson said.

"Affordability is key", Cr Robertson said. "We need to do our job of looking after the environment and providing public transport well and affordably."

An efficiency review last year showed that despite significant increases in operating spending of the past few years, the council maintained "one of the lowest spends per head of capita across the regional council sector in New Zealand".

However, Cr Gary Kelliher said thanks to the previous government regional councils had been given "almost free rein to grow substantially and become bureaucratic monopolies while viewing ratepayers as an endless provider of funding".

"I don’t agree with these year-on-year massive increases", Cr Kelliher said.

The council needed to do much more belt tightening in this long-term plan, he said.

Cr Michael Laws said the council was "over-staffed" by about 50 full-time positions.

"That’s the major reason for rate increases — staff costs", he said.

The "absurdly expensive" new council headquarters under construction in Dunedin’s city centre was another.

Rates revenue for the council this year was $55,778,000, a staff report said.

Under the proposal before councillors it would rise to $67,665,000 in year 1 of the plan, then $78,312,000 in year 2, and $89,881,000 in year 3.

To ease the requirement on rates revenue the council-owned Port Otago would pay an increased dividend, the report said.

The $15 million the port company was to pay the council this year would increase to $18m next year and then $20m for the rest of the 10-year plan, it said.