The council has been very busy. They have approved the next phase of the library building. They are soon going to approve the next phase for the museum, and they are warming up to approve the aquatic center. All wonderful stuff, except for the poor starving ratepayers who are going to have to pay for it all.
Ordinary ratepayers are struggling with cost of living increases which are way above increases in income. Most Tauranga residents can not afford the planned rates increases. For 2025/26 the planned increase in rates take is 12.6%. The Mayor has stated that he wants that to be the maximum, but the past bitter experience for ratepayers is that the actual increase will be higher. For example for 2024/25 the projected rates increase was 8.6%. The actual rates increase was 11.1%.
Most Tauranga residents can not afford the projected rates increases. Many residents and small business owners are going to be forced out of their homes, or out of their businesses and forced to either downsize or leave Tauranga. Even for people who rent their house or their business premises, the rates increase are passed on as increased rental costs. This will put huge financial pressure on many residents and small businesses. That is not all bad news for everyone. It means that the developers can snap up properties on the cheap. Good news for the developers. Bad news for the rest of us.
In my conversations with Tauranga people, I am constantly hearing the anxiety about the massive rates increases. Even people who I would assume were able to afford the increases are talking about selling up and leaving.
In 2012 the council adopted a rates cap policy of inflation plus growth plus 2%. The policy was optional but it at least set a target. It seems that this policy has been removed. Certainly, the council has not followed that policy in recent years.
In reality, even the plus 2% is unsustainable. Most residents income is rising with inflation or even slightly below. The 2% extra means that over a period of time, 100% of residents incomes will be required to pay rates, and then eventually more than 100% of income will be required. Clearly to us, but not necessarily to the elected members and the council management, this is not sustainable for residents. For ordinary Tauranga residents, we are already paying more than we can afford in council rates.
I am proposing that we should ask council to put a cap on rates increases equal to inflation plus growth, with no extra margin above that. Now council will argue that we need that extra margin. But the reality is that Tauranga residents do not have the ability to pay that extra margin, particularly in the long term when it will mean that all of our income will have to be spent to pay rates.
There is an old saying that you have to cut your suit to fit your cloth. If the Tauranga residents can not afford these rates increases, then council should adapt spending to match what we can afford. In the long term, Tauranga residents can only support council spending that we can afford. If we can’t afford it, then it needs to go.
The rates cap should also apply to all of the following years of the Long Term Plan (LTP).
Council would have to take a number of steps to achieve that. That would require leadership and hard work. It is much easier just to sign off on these massive unaffordable rates increases every year. To achieve a rates cap council would have to do the following:
- For the 2025/26 annual plan and all following years of the LTP:
- Cap rates at inflation plus growth (including levies).
- Adopt a balanced operating budget.
- Levy developers 100% of growth capex.
- Conduct a deep restructure of the Council organisation to improve efficiency and effectiveness, and restore core competency.
- Fix Council procurement and contracting processes.
- Bring the work of external consultants back in house.
- Fix the toxic work environment and poor staff retention.
- Hold staff accountable.
- Review all Council expenditure and capital projects for ratepayer affordability, including the city center projects.
- Cancel the agreements with Priority One and bring economic development back in house.
Do you think our Mayor and the elected members are up to the task? If they are not why did we elect them? Maybe Olympic gold medals don’t always translate into effective results.
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