Long Term Plan – some background information

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The LTP will be open for consultation next year: But all is not well with the processes  involved that affect residents in Remuera. There is widespread understanding that increasing annual rates look likely to be with us for the foreseeable future –  and that the Council is asleep at the wheel in terms of creatively addressing alternatives.

A perfect example that backgrounds the current planning processes is what has happened with Local Boards with this years allocated funds for capital projects. In September the Finance & Expenditure Committee decreed that $300 must be pruned from budgets, and set council officers to propose deferrals to achieve this. This is despite the the fact that they were talking about this year’s expenditure plans.

As the Orakei Local Board has noted: ‘..They had already agreed with the Governing Body (the 2014/15 budget) and that a unilateral change by the Governing Body without Orakei Local Board agreement is inconsistent with the shared governance of Auckland Council”  Remember that these budgets were the final expression of several rounds of consultation for Local Board Plans over 6- 9 months and consumed many paid & unpaid hours in their development.

So Officers proposed deferrals $1,499,298 of the Orakei 2014/15 Budget, the Board could only agree to $391,454 of deferral, but the Officers recommendation went ahead at $1,490,446 (after agreeing not to defer approx $8,000 of work because the seating, pathway and picnic area at Glover park was actually underway at the time)

Not just the Orakei Local Board, but all Local Boards were affected to a larger or lesser extent, and were not amused! This might have been the beginning of the crisis that is now becoming very apparent.

With this backdrop, the Council’s Budget Committee has made a number of key decisions that will be included in the LTP, (as resolved on 5 & 6th November). These are in the document copied here:

“On 5 and 6 November 2014, Auckland Council’s Budget Committee made decisions for its draft Long-term Plan (LTP) 2015-2025, the council’s next 10-year budget. The decisions are not final – they are draft proposals that council will put out for public consultation early next year. The plan can, and will change once we have received Aucklanders’ feedback.

Below is a summary of the key decisions made.

  • 3.5 per cent average rates increase

Consult with Aucklanders on a 3.5 per cent average rates increase for each year of the Long-term Plan 2015-2025. This compares to the Mayoral Proposal of 2.5 per cent average rise in 2015/16 and 2016/17 and 3.5 per cent for each year thereafter.
The Budget Committee agreed 16 votes to 7 that keeping average rates at 2.5 per cent in the first two years was too constrained for the council’s overall budget, particularly for the area of parks, community and lifestyle which was facing significant capital expenditure reductions compared to what was previously planned.
A 3.5 per cent average rise remains less than forecast in the previous Long-term Plan 2012-2022, which would have seen average annual rates increases of 4.9 per cent.
The proposed 3.5 per cent increase equals about $2-3 extra per household each week.

  • Development charges and sale of non-strategic surplus assets

Increase the overall level of development contributions charges annually in line with inflation from FY 2015/16.
Increase council’s targets for the sale of non-strategic surplus assets by $20 million per annum.
These increases along with the 3.5 per cent rates increase, means council’s parks, community and lifestyle areas will now be able to invest $800 million more in projects over the ten-year plan, than was outlined in the Mayoral Proposal.

  • The fixed portion of rates

Keep the fixed portion of rates (known as the Uniform Annual General Charge – UAGC) to its current proportion of 13.4 per cent of rates. Adjusted for the 3.5 per cent rate increase, the UAGC is proposed to be at $385. This is the amount every ratepayer pays to council regardless of the valueof their property.
The level at which the UAGC is set affects the amount of rates raised from high value properties and low value properties. For example, if the UAGC is increased to $500 per year, then rates will rise for lower value properties and drop for higher value properties. If the UAGC is lowered to $250, rates will rise for higher value properties, and drop for lower value properties.

  • Business sector contribution to rates

Set the business sector contribution at 32.8 per cent of total rates revenue for 2015/16, down from 33.3 per cent in 2014/15. This delivers an average benefit to business ratepayers of $260. The business sector differential is now set to reach a proportion of 25.8 per cent by 2025/26.
Also, move from a ratio approach to setting business differentials to a percentage proportional approach. This change removes an unintended windfall benefit to businesses that would have resulted from the recent revaluations. The new approach also avoids an additional rates cost of 5 per cent for households.

  • Debt

Forecast net group debt of $11 billion by 2025. This forecast will result in a $2.7 billion reduction in growth of council debt compared to what was previously planned.

  • $6.8 billion basic transport programme

A $6.8 billion basic transport programme will be included in the draft budget. This is a 33 per cent reduction in capital expenditure on transport compared to the council’s previous Long-term Plan.
This basic transport package includes funding for major projects such as the City Rail Link, the East-West connections and SH1 intersection improvements at Warkworth. It does not however stretch to the majority of projects included in the fully-integrated Auckland Plan transport network.

  • Two transport budgets and alternative funding

Consult with Aucklanders on two transport budgets – the basic transport network provided for in the draft 10-year budget vs the Auckland Plan transport network which aims to fix Auckland’s transport issues. Council also agreed it would ask Aucklanders whether they are comfortable with the basic transport programme or whether they want to invest more to get the fully-integrated Auckland Plan network.
The fully-integrated Auckland Plan transport network includes many more projects such as new park-and-ride facilities, planned cycleways, the north-western busway, road improvements, Penlink and rail electrification to Pukekohe.
Council also considered options available to fund the Auckland Plan transport network. They agreed to consult with Aucklanders on both alternative transport funding options presented to council by the Independent Advisory Body in late October. The funding options look at how Auckland can fill its $12 billion transport funding gap over the next 30 years in order to get the advanced Auckland Plan transport network.
The two funding pathways are:
1. Rates and fuel tax – this pathway uses all existing funding tools and would require average annual rates increases of around 1 per cent (in addition to the proposed 3.5 per cent increase) and annual fuel tax increases of 1.2 cents per litre (in addition to increases signalled by the government) every year or;
2. Motorway user charge – a charge on motorists each time they use the motorway network. If Aucklanders opt for this pathway they would pay around $2 when they enter Auckland’s motorway system, however this may vary by time of day, or day of the week and be free at nights. This pathway has the additional benefit of influencing travel behaviour.

  • City Centre Targeted Rate

Continue the City Centre targeted rate for the duration of the LTP. Secondly, while the targeted rate will largely fund capital projects, the operating costs and depreciation of those projects will now be funded from the general rate.

  • Proposals for Maori

Provide funding for priority projects for Maori; including a signature Maori event, Marae development, Papakainga development and an additional fund in years 4 to 6 (to be finalised over the next month).
Also provide funding to meet the cost of co-governance entities for the next 10 years.

  • Business Improvement Districts

Staff to carry out work with the Business Improvement District (BIDs) and relevant local boards on the nature and costs of council support services provided for BIDs to ensure value for money.

  • Standardising and increasing social housing rent

Standardise the rent on council’s social housing units to be based on 30 per cent of tenants’ gross income. Secondly, agreed changes to annual rents (including increases or decreases) are capped at $780 per unit (equivalent to $15 cap on weekly rents).

  • Standardising fees and charges

Standardise, from the diverse policies of the legacy councils, the fees and charges for street trading, cemeteries and other services, with the exception Hauraki Gulf islands, which will be discussed further at the next Budget Committee meeting.”

 

LTP 2015-25 Consultation opens late January for 5 weeks. Please note the scheduled Public Meeting in Remuera on 17th February next year (refer Events Calendar)

Iain Valentine

18 November 2014

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