Many journalists and central government politicians (mainly the ones who sleep in blue or yellow pajamas) have recently promulgated the view that local government rates in Auckland are “out of control”. In the video below, Paul Henry gives you a flavour for the fervour emanating from these corners.

Capture

Henry’s video segment contains a lot of heated rhetoric, but precious little data. Like Henry, I am also a rate-payer. And I was genuinely interested in what the data says about historical trends in rates in Auckland. In this post I consider Henry’s central claim, i.e. that rates are “sky-rocketing”, and try and hone in on some interesting questions relating to local government rates, and in particular what people mean when they talk about trends in local government expenditure. I finish by discussing my preferred measure of local government expenditure, and also provide some comments on some interesting issues that Paul Henry does not discuss – but which underpin many of the issues he is interested in.

Now, from Henry’s segment it’s not immediately clear to me how he defines “rates”, so let’s approach the topic using a couple of indicators.

In the figure below I have plotted total rates (indexed to 1996 levels) collected per annum for the period from 1996-2014. This figure illustrates trends in Auckland versus other local governments in New Zealand (NB: Data on local government expenditure and consumer prices is sourced from Statistics NZ). Note that because the local government definition of “Auckland” changed in 2010, I’ve followed the convention of defining “Auckland” prior to this point as the seven TAs plus the regional bodies (ARC and ARTA).

C1 Total rates collected

A couple of things emerge from figure C1. First, we find that the total amount of rates collected in Auckland has declined in real terms since 2011, i.e. about the time that Auckland Council was formed. The total amount of rates collected in 2014, which is the last year for which data is available, was approximately the same as that collected in 2009. Second, the flat-lining in total rates collected since 2011 is in stark contrast to trends for the 15 years prior to this point, in which time rates increased in real terms by approximately 75%. Third, during the last five years local governments elsewhere in New Zealand have increased their rates by about 10%, while rates in Auckland have declined.

Conclusion #1: The amount of rates collected by Auckland Council in 2014 was 5% lower than when the super-city was first formed, i.e. total rates have reduced in absolute terms since Auckland Council was formed.

The previous figure considered total rates collected. However, in this period the population has generally been increasing, both in Auckland, in particular, and New Zealand, in general. To control for this fact, in figure C2 I have plotted rates collected per capita per annum.

C2 Rates per capita

Factoring population growth into our analysis accentuates the trends identified in figure C1 . First, we see that in 1996 rates per capita in Auckland were at a level that was very comparable to the rest of NZ. Since 1996, rates per capita have increased more slowly in Auckland than elsewhere in New Zealand. We find Auckland’s per capita rates peaked in 2010, since which time they have declined by approximately 8%, or ~2% p.a. In contrast, during the last five years other councils in New Zealand have increased rates per capita by approximately 9%. To put it another way, had rates in Auckland risen at a similar rate to the rest of the country since Auckland Council was formed, then they’d be approximately $200 per capita per year higher than what they actually are.

Hmmm. The “super city” appears to be at least as effective as local government in the rest of New Zealand. It’s not looking very good for Mr Henry?!?

Conclusion #2: Rates per capita in Auckland peaked in 2010, and have since fallen by 8% to now be 20% below the New Zealand average. Both local and central government expenditure is lower in Auckland than the New Zealand average.

Not only have we found no evidence to support Henry’s central claim, but we have actually found evidence to the contrary: Rates in Auckland have declined in both absolute and per capita terms, such that rates in Auckland are now 20% below the New Zealand average. Why did this freely available and highly relevant data did not feature in Paul Henry’s 10 minute segment? It’s notable that in this same segment, Paul Henry claims that rates under Auckland Council are “sky rocketing” and goes on to accuse Len Brown of being a “liar” for not keeping rates increases in line with inflation. Claims that are made without presenting any data, and which contradict the data that I have been able to find.

From what I can tell, Henry’s claims about rates are incorrect (NB: Some might use the phrase “shitistics” to describe Henry’s analysis).

More generally, the data suggests Auckland Council has maintained rates at or below historical levels. And in amidst all of Henry’s operatic soap-boxing about rates rises, he seems to have overlooked some interesting questions that are worth discussing. The first is that the increases in rates that are levied on residential activities (which I think is actually what he means when he refers to “rates increases”) has come about because of a strategic decision by Auckland Council to reduce rates levied on businesses. The rationale for what effectively amounts to a ‘rates switch’ is discussed here on Auckland Council’s website. This important issue does not feature in Henry’s segment.

Rates differential

Put simply, it’s important to remember that the rates collected by Auckland Council is sourced from both business and residential activities. Moreover, Auckland Council has previously made a strategic decision to shift the burden of rates away from businesses and instead onto residents (NB: Arguably residents end up paying for the rates levied on business activities anyway, through either 1) higher costs for the goods and services that they consume and 2) reduced employment and/or lower incomes).

Nevertheless, it is important that conversations about residential rates in Auckland are considered within the broader context of reductions in business rates. Now Henry may think businesses should pay higher rates, and I’m interested in having that debate. But it doesn’t change the fact that rates (by both aggregate and per capita measures) have fallen since Auckland Council was formed. Which brings me to my final point …

Conclusion #3: While total rates and rates per capita have decreased by 5% and 8% respectively since Auckland Council was formed, the rates paid by residential activities have increased so as to fund even larger reduction in the rates paid by business activities.

I’ll say from the outset that this policy direction is one that I support at least on a high level, for reasons that hope to discuss in more detail in future posts. In my opinion, such a move is not just desirable because it is likely to promote “business and employment growth”, but also for creating a level playing field for land use investment decisions, as well as more direct democratic accountability. However, I’m interested in other views on the topic …

I’m also interested in a wider discussion on how we measure relative levels of government expenditure.

Personally, I’m a fan of per capita per annum metrics. This applies to both local and central government, where the latter has been previously analysed by Brian Fallow at the Herald. In a country with a growing and ageing population, such as New Zealand, maintaining total government expenditure at or below inflation effectively amounts to spending cuts for the average person. In my view, the default position would be for government spending per capita to remain constant over time, with deviations from this level then being justified by whoever is in government at the time. I note that even this more mild type of fiscal constraint would likely result in government expenditure as a proportion of economic activity reducing over time, as real per capita GDP increased in response to productivity growth.

Finally, this discussion of rates in Auckland is all the more interesting given Peter’s recent post on central government expenditure, which showed that – compared to other regions in New Zealand – Auckland receives slightly less central government expenditure per capita than what you’d expect based on its proportion of the population and GDP. I’m personally comfortable with this transfer because the Auckland population is, on average, wealthier, healthier, younger, and more productive than New Zealand as a whole. However, given the relative lack of expenditure by central government you might expect Auckland Council would need to spend more than average. But the reality is quite the opposite: Total government expenditure per capita is significantly lower in Auckland than the NZ average.

To sum up: In response to the question of whether Auckland Council is “out of control”, this computer says “no”. And in the eloquent words of hospital receptionist Carol Beer, I hope people like Paul Henry would rate this information as “ff’ing helpful“. Perhaps next time Henry feels like doing a hatchet job on Auckland Council, he might first spend at least five minutes doing some elementary research. Like, you know, finding at least one reliable piece of data that doesn’t contradict his claims.

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108 comments

  1. Those who shape the conversation are rich, white, and usually male living in large residential houses in wealthy areas. These people are the most able to pay, and since amalgamation are paying their fair share in the region, not within the wealthier Isthmus or Shore.

    This rich, white men need something to complain about

    1. I’m not sure it’s quite that simple. Yes politics has socio-economic, ethnic, and gender related dimensions, but my gut instinct is that “middle” Auckland is a pretty diverse place.

      IMO (as I’ve stated before) the battle for Aucklanders hearts and minds won’t be won by extremists like Judith Collins and Paul Henry. It’ll be won by people like Christine Fletcher and Phill Goff and other decent Aucklanders who actually understand that many Aucklanders love our city and that we appreciate many of things that Auckland Council has achieved in just under 4 years.

      1. It’s not the rates increase I’m worried about it’s the absolute lack of outcomes for some parts of the city. In Waitakere there is no puclic swmming pool, no recreation centre, and no funding was spent on the Glen Eden developemnt promised in 2010. There is no economic/streetscaping devolopment in either of the West Auckland local boards of Henderson or Waitakere . And the capital projects we do have are non tendered projects which go into trusts in which council staff and elected members or friends of are trustees or employees, which have vague non asset outcomes and seem to be more about educating the public and party politics. I don’t want to pay rates becuase of the ongoing refusal for the proper channels to deal with these issues. .

          1. Rates foing up – lack of outcomes, and corruption are inextreciably linked. The conversation is about rates going up. Sailor boy says it’s regional. I agree that there are regional differences in what’s happening with the rates and the outcomes. What the post is definitely not about is the political differences between Paul Henry and Christine Fletcher.

          2. The post is about trying to understand whether rates are going up from the perspective of the Council. The answer to that question, from what I can tell, is “no”. We all have views about particular aspects of what the Council is or isn’t doing well, but that’s not really a topic to discuss here.

            Some things for you to consider:
            – $500m for western line double-tracking,
            – $100 million for undergrounding New Lynn,
            – Hobsonville ferry
            – CRL, from which the west benefits the most
            – NW busway to Westgate (plus new bus station, park and ride, shared space and library)
            – NW cycleway

            And that’s just public transport and walking cycling. There’s also approximately $2 billion in the pipeline for upgrades to SH20/SH16. Which comes hot on the heels of a lot of investment in SH18 around the upper harbour.

            From what I can tell Waitakere is doing fairly well from *all* levels of Government. Probably because it’s an area that sits in the centre and swings a lot …

          3. I think it’s a fair comment, and speaks very well to this debate.

            I have often said that people care much more about their pools and libraries and local roads than they do about $100m-$500m upgrades to state highways and other large projects. If Auckland Council was to focus slightly more on building facilities which give people joy, such as pools and local arts centres, then the people they serve would be much happier with whatever level of rates they pay.

            It’s this disconnect that forces the issue. In former-Manukau they have free pools, thanks to the old council and an area level, and these are enjoyed very much. They also save lives; drowning kills almost as many people as road accidents, and inability to swim is a major contributor. The isthmus area lack many facilities – and those that exist are expensive, and the east and west are underprovisioned compared to Manukau.

            Why do people think their rates are too high? Because they can’t see what they’re getting for them. And they’re often not getting the icing on the cake that they could enjoy.

          4. I think the model where the Elected Members and council staff ae running trusts to deliver projects with bugger all transparency is dodgy and directly relates to a high rates bill with few outcomes. I wonder if there’ll be a Trust for building the CRL. The charitable trusts are not transparent and they’re using them to deliver core infrastructure – in partnerships with the pokies trusts. They’re not just going to your local football club. They’re handling multi million dollar projects, and they’re not declared in the Councils’ suppliers or contracts lists. None of those places you mentioned are anywhere near central West Auckland. Hobsonville Point is in Upper Harbour – decile 10. And as for the double tracking – where was the outrage over the Viaduct tunnel flyover for the North Shore. But I won’t itemise by project. But yes we have rising rates and few outcomes for some. I think we’ve got some serious issues. And for those of us who live in neighbourhoods with poverty it’s like a complete disconnect from the outcomes we see for other areas on this blog.

          5. -Kereru, the local boards have a large amount of discretionary funding. I’m sure they do something with it. Try having a look at the board or the council magazine to see some of the work they are doing in your area. Also as far as I’m aware the free pool in my local area is funded by an additional rates levy.

        1. The biggest investment project over the next few years for the Council is the City Rail Link, which helps West Auckland enormously (arguably more than any other part of the city).

          1. IF the CRL maybe goes ahead, depending who is elected, then that’s great. and will be an amazing asset particularly for South, Central and West.in 5 – 10 years Agreed. But there are problems in Local Govt. . Thepromise that we may get a rail loop in 10 years doesn’t preclude the fact that we are entitled to parks, economic development, transport, etc and that those projects should be consulted on and executed with honest and integrity. So my point was I think there is an issue not just with rates going up but with a serious lack of outcomes from the budget that we received due to conflict of interest issues and shenanigans in Auckland Council.. I realise this isn’t the case for all parts of the city.

      2. Yes but the hearts and minds of Aucklanders might have been easier to win if they had been asked if they wanted amalgamation in the first place. Both Wellington and Hawkes Bay voted it down in a referendum. When do we get to have ours?

    2. God knows whether you are right in your gross stereotyping, but I think it is a good point that post amalgamation some parts of the city have seen large rate rises due to the evening out of rates across the city. This is another reason for rates rises for large areas of the city and is real. The undemocratic way tiebout competition was removed from Auckland is a concern.

  2. Very informative and great work.

    I read last week that the National Party are looking to go into next years Auckland local body elections under their own brand rather than the C&R facade, or at least with both colaborating. And as predictable as night following day so begins the spade work a year out, pick a straw man or two, convince the voters there are problems that don’t really exist and tell the morons, your team is going to “fix” them! Who knows the complete or real reason in Nationals interest in Auckland but I can see there are too many ratepayer owned opportunities going begging!

    It’s a given Paul Henry is a National Party stalwart and arguably Mediaworks is their broadcaster and so what we are witnessing now is the opening salvos in a bullshit laden ride to the polling booths. Lets see what other outrages there are in store for us idiots to be lured in by. There might even be payments in lieu of our votes like the AECT 2015 election?

    1. Re: Paul Henry: My main issue is not the fact that his personal values align with the political right. I actually enjoy reading commentators from across the political spectrum, and don’t mind if some of them have clearly stated positions.

      BUT, I do have an issue with him not exercising some professional integrity. That is, journalists should not make 10 minute segments without doing any research and without presenting an alternative view-point.

      1. You make the mistake of crediting him as a journalist, when clearly he is not. so you do us, and journalism an injustice with this comparison.

        He is simply a better connected (but not informed) Whaleoil, in a smart(er) suit.

        1. Meh. The FB page for his show has the by-line “Media/News/Publishing”.

          And don’t forget that even WhaleOil claimed (and was found to have) journalistic privileges by the courts.

          Hence I think it’s reasonable for me to hold Paul Henry to account for shit journalism.

          1. “even WhaleOil claimed (and was found to have) journalistic privileges by the courts.”

            True, but only a journalist for the purpose of claiming protection of his sources, for when the cops (or a liable case) came calling. And if I recall, it was found to apply in one particular circumstance and not necessarily was a.general precedent.

            Since then the law has changed.

            As for being a true journalist, well last time I checked, he was not a member of the relevant (statutory) bodies that now exist in law these days, for which membership is needed, to make him an (online) journalist (or Whaleoil a publication), with the rights and responsibilities that entails including right of reply etc.

            So while Whaleoil’s sources *may* be protected because he was held “to be a journalist” a few years ago, his right to say what the f*ck he wants – in the guise of protecting the public’s right to know, and be protected is not necessarily so.

  3. It’s a stupid argument anyway
    Would you rather have a council that charges $10 in rates and delivers $12 in services or one that charges $30 in rates and delivers $75 in services?

    1. so true. I didn’t discuss the question of value for money, mainly because I felt like the post was long enough anyway. I also feel like the issue of value for money is more subjective than the questions considered in this post, which is simply about what is happening with rates. But it’s definitely something that we’ll be considering in future posts on this topic.

      1. well, two choices 1) slow news day in Henry-land and/or 2) right-wing strategy to hatchet public perceptions of Auckland Council to benefit right-leaning candidates in the next local government election.

        I opt for #1 primarily because I prefer to live with the delusion that the media is not dominated or readily influenced by conniving media politico-hacks. C’est la vie!

    2. +1

      Especially when you consider that in a sprawling city rather than a compact one, we are all paying for ever more extensive infrastructure.

      Are there any overseas examples of comparable cities with similarly growing populations without the sprawl. What do their rates charts look like?

        1. Thank you. I guess there are too many other variables to make a sensible comparison of infrastructure costs using what rates are paid towards those services as a proxy. Presumably infrastructure costs per capita are available though as mostly these are provided by regulated business which are required to disclose a useful set lot of financial and non-financial data.

    3. Very true and this is the exact issue with the Supercity. Instead of having at least some limited choice of council, we now have none. So if a group of people demanded a low cost low service model they could move to an area with these attributes and vice versa. Not possible now.

  4. *** This comment has been edited for violating our user guidelines (i.e. off-topic and moaning about the blog). Play nice or naff off. ***

    1. Hmmm … I think we’re considering different issues, and I don’t think you can necessarily infer what my views are on the issue of Henry’s relative “truthiness” from my post. More specifically, the post is focused on understanding whether Henry’s segment was accurate. Your comment seems to be focused on whether the average vote believes Henry.

      While they’re both important questions, they are different questions.

  5. Any idea what will the graph look like with 2015 data added? Seems to me this year’s rates hikes are a big part of the issue.

    1. it’s hard to say. The transport levy will push it up, but the population is growing gangbusters.

      On that basis I’d expect per capita spend to remain about the same, while total rates collected increases slightly.

  6. Auckland’s rates don’t seem that bad compared to the rest of NZ. The 2014 figures (average for each region shown):

    WHO PAYS THE MOST?

    1. Western Bay of Plenty District – $3,274

    2. Far North District – $3,027

    3. Tasman District- $2,841

    4. Auckland Council – $2,636

    5. Nelson City – $2,597

    6. Manawatu District – $2,566

    7. Whakatane District- $2,468

    8. Queenstown-Lakes District- $2,420

    9. Waitomo District – $2,408

    10. Gisborne District- $2,385

    WHO PAYS THE LEAST?

    1. Mackenzie District – $1,104

    2. Whangarei District – $1,213

    3. Southland District – $1,534

    4. Hurunui District – $1,559

    5. Ashburton District – $1,560

    6. South Waikato District – $1,661

    7. Grey District – $1,680

    8. Waimate District – $1,700

    9. Christchurch City – $1,706

    10. Kaikoura District – $1,710

    1. yeah I agree, especially when you consider incomes and wealth differentials. What’s the source for this data? I’m interested in knowing how it was calculated.

    2. Presumably this is from the Taxpayer’s Union publication? I’m not totally certain, but I think they may have excluded regional council rates from the sum paid in non-unitary council areas.

        1. I know this is getting a bit off topic but your quotation of the NZ Taxpayers Union proves to some extent how deep this governments interference in everything has become and on this subject, quite relevant. Unfortunately the “Taxpayers Union” is a sham and not worth any further thought.

          To paraphrase Nicky Hager from Dirty Politics, it was nothing more than a David Farrar political campaign initiative launched in October 2013, an example of a supposedly independent organisation designed to back up the work of a political party, namely National and proved to be a vehicle for promoting smaller government and implicitly supporting the National Party. It also proved useful for accepting anonymous and undeclared donations and in effect operates at arm’s length from National. In my take on it, it is nothing more than a National Party lobby group designed to lobby the National Party. Oh and a fund diversion group.

  7. I’m what you would call a classical liberal I.e these days hard economic right but tbh I think most of the right wing in this country are hacks e.g. ACT for private property but pro nimby zoning laws and school zones. National “fiscally responsible” 20 + billion motorway binge.

    Personally I would like to see rates changed to land value tax, council spending in areas other than transport be slashed, zoning laws abolished and transportation funding decentralised to AT.

    6 billion third crossing becomes Northshore, Northwest and Upper Harbour Metro. (Silverdale to CBD via side of SH1 then CBD to Westgate via side of SH16 then reconnecting to back to wNS Metro via side of SH18.

    Puhoi Wellsford becomes pukekohe extension plus Southwest-Airport Line via Otahuhu.

    East-West plus other motorway upgrades become the 4 LRT routes.

    1. Exactly. There’s nothing inevitably left-wing or right-wing about good urban policy. There are aspects of successful cities that appeal to left-wing values – cities are relatively egalitarian and open to diversity – and to right-wing values – cities are the physical embodiment of economic productivity and wealth generation.

      See: http://greaterakl.wpengine.com/2014/10/20/the-confused-politics-of-the-city-and-the-market/

      On balance, I would tend to argue that left-wing politicians currently have better *incentives* to get urban policy right. Their voters are more likely to live in larger cities whereas right-wing parties tend to get votes in rural areas, small towns, and suburbs/exurbs. But it has not always been thus…

    2. Couldn’t agree more. Seymour is a disgrace to the classical liberal tradition.

      To say school zones and neighbourhood character are “property rights”, and thus conveniently compatible with his party’s ideology, is weasel logic at its finest. The zoning situation at Grammar is going to be ridiculous in 20 years when you will have apartments across the road that are ineligible. The simple answer is to give fringe parts of the zone to neighbouring schools to ease roll pressure, but imagine the outcry from the Epsom twats about that!

      1. I asked Seymour point-black a couple of months ago whether X-amount of sunlight was a property right and amusingly he had no answer. Promised to think about it though.

  8. Did you consider water rates in your analysis? Unfortunately a lot of the council’s money is collected by watercare rather than through rates. A lot of the other council’s don’t charge for water.
    An average family could easily spend $1000 a year in water.

    1. very good question. It’s not included under rates, which makes comparisons difficult with other councils. But it probably doesn’t change the trends … and anyway, Henry’s article talks about “rates” so I think it’s fair to limit ourselves accordingly.

    2. Good point, my water+wastewater rates runs at $55 a month = $660 a year [and about half that is fixed “line” charges I can’t eliminate even if I never use a drop of water that month/year]

      Add that to the average Auckland rate and you suddenly have jumped up the table to number 1 or number 2 position.

      Many other councils do include water and wastewater in their rates so the comparison is wrong.

      Even so, a question I have what is the outcome of graph 2 if you change it to graph it by the number of ratepayers, not just population/per-capita (i.e. graph the average rate, indexed over time).

      I know its not accurate as the business rating differential masks the true average residential rate – which will be lower than the average graphed this way.
      As the business rates are higher as their buildings have a higher value than residential buildings hence start from a higher rating base, so this skews the average rates up.
      Still be interesting to see the impact.

      The point being is that people see their annual rates bill going up, but they don’t divide the rate bill by the number living in the house (or city) – its a cost to the household, like insurance is.
      You generally don’t “per-capita” the insurance costs on your house. You have to pay the full amount to be insured. Same with rates.

      Of course, council rates are set on a zero-sum basis – so income matches expenditure – so more people = more expenditure = more rates $ per rate payer (property), but not necessarily more rate $ per-capita.

      1. meeeeeehhhhhhhhhhh. Please note that Geoff’s table is not sourced and hence it’s accuracy can’t be verified. I wouldn’t take it as given, especially if it came from the TPU for the reasons Peter notes.

        I’m sure you can improve or extend this (admittedly simple) analysis in many ways.

        But the primary point was to highlight the lack of evidence for Henry’s claims (NB: The comparison to other councils was just a secondary piece of analysis). More specifically, Henry’s claims were mainly about *trends* in rates. Given that Watercare has been split out from general rates for a long time I don’t think including it would change the results much.

        1. As I mentioned below wastewater has only been split out since amalgamation, at least for the north shore. Franklin and Rodney I don’t think had any relationship with Watercare per amalgamation so had both water and wastewater in their rates bill.

          1. “In addition, for customers on the North Shore, in Waitakere, Rodney and Franklin, the changes mean that the wastewater charge is no longer be included in their rates bill.”

            http://www.watercare.co.nz/about-watercare/news/Pages/Watercare-to-introduce-changes-to-water-and-wastewater-charges.aspx

            So add Waitakere to the list for those with wastewater previously included in rates. That is about 40% or more of the population that have had this change. That will add up to something pretty substantial and may account completely for the change in the trendline post amalgamation.

      2. Greg, I think there’s several ways to approach the rating question. The household perspective is important, and I’ve tried to touch on that.

        To say households don’t split costs per capita does not invalidate analysis showing that rates (in total and per capita) is flat or even declining from *Auckland Council’s* perspective. And remember the latter was the target of Henry’s segment, which is the topic of this post. Henry didn’t say *rates for some ratepayers* are going up, but instead he said *rates are sky-rocketing*.

        The former is true, the latter is not.

        The key point is that rates in aggregate and per capita have not increased. That is what is relevant to Auckland Council and Henry’s segment. How the rates are apportioned across different people, and in turn how those people interpret the rates they pay are separate questions. Valid questions, but separate questions.

        1. Henry can without a doubt truthfully lay claim to, and I’m sure demonstrate with evidence, that yes “rates are skyrocketing” – *for some Aucklanders*, conveniently/simply not disclosing the fact that these for whom the rates are skyrocketing are literally sitting on a mountain of gold in the form of large multimillion dollar properties in now very desirable areas which have values that have risen by a large amount of value relative to the neighbouring or similar properties elsewhere in Auckland, for which the owners believe they have no current easy way to unlock the value of to pay their rising rates without selling the house*.

          So yes he can claim that fact as truthful. So you won’t ever win that argument.

          But you are right, its not however the general case that all of us are in that boat. But for people like Henry [and The Herald], *any* exception proves the rule, so in this case “one swallow, does make a summer”.

          *Auckland council do offer a method of “putting the rates on the house” – but they don’t make it that all that clear that its available – nor any idea of the true costs of doing so, but I’d bet for most of these folks in this situation, whatever the “cost” of using this service to lower their rates bills – it will be dwarfed by the further increases in capital value of their properties over that same time, meaning they and their estates don’t miss out, and they are not forced to sell down until they’re ready.
          Auckland Council also seem to have a limited time for which they will allow this process to occur, so its not a panacea for everyone on a fixed income to use to manage their rates bills going up.

  9. You have to ask yourself why the council doesn’t make this well known! I know since the super city our rates bill has gone up around 40%. I knew the reasons, an awful lot of other people don’t – but I am quite amazed that total rates collected has actually gone down!

    When will they stop the rates shift from businesses? Surely over the last few years it has become a lot more balanced?

    Maybe they should have let the super city bed in a bit before trying to target rates shifts. They probably should have had a higher uniform charge for a while as well to prevent these massive increases in the rich areas. At the end of the day the council is an elected body, and massive rates increases for the types of people who do most of the talking and voting isn’t such a great plan.

    1. the short answer is “I don’t know”.

      The long answer is I think Auckland Council tries to get this information out there, but – how shall we put this – certain elements of the media don’t want to listen?

  10. I wouldn’t just blame Paul Henry over this issue. Pretty much everyone over the past few years has run the line that the Council’s finances are out of control and rates increases have been extremely high. Which, as you’ve shown, is bullshit.

    1. Yes, it’s total bullshit. I think the main lesson in all of this is that New Zealand’s media is collectively failing to do its job. If engineers designed bridges as badly as reporters reported the facts, we all would have died in bridge collapses by now.

      It’s hard to see what to do about an industry that’s committed to constantly being wrong on important issues. Keep blogging, I guess?

    2. I agree it’s been a collective failure on the media’s part.

      But I don’t think you can let Henry off the hook so easily. He’s a journalist who is paid to identify and research issues. Henry decided to dedicate 10 minutes on air to this topic, but he couldn’t even spend 10 minutes to get the basic facts of the matter sorted before he did.

      It’s not reasonable to excuse his mistake simply on the grounds that other journalists and politicians have also made the same error. Two wrongs don’t make a right, and Henry should be wise enough to check his sources. That’s what journalists are meant to do …

    3. Spending is different from rates remember and the council is borrowing. Stu has presented info on rates only, not spending.

  11. I bet Paul Henry doesn’t do research. He’s a media presenter (nb, not a journalist) and he likely has staff to do research if any. Whether that makes him more or less responsible for errors of fact I don’t know.

    But anyway media is not about truth. Media is about retaining audience attention so as to be able to charge more for advertising..”Nothing to see here” doesn’t make you listen/watch/click.

    1. If the media is simply another industry producing a consumer product, I see no reason why they shouldn’t be subject to the Fair Trading Act, which bans misleading or deceptive conduct and false representations about goods and services.

      Of course, if you tried to do that, media presenters would scream, saying that it would muzzle the fourth estate’s role as a check on power. But they can’t have it both ways – if they are not committed to reporting the facts, it follows that they can’t be an effective watchdog.

      1. Free to air media is paid by their advertisers. If they lie about their audience numbers the advertisers have a case. Content is not part of the contract with advertisers. Audience are not the customers and hence how could they have standing?

        If it’s a subscription service then the audience might have a case.

        1. They’re marketing themselves to consumers as providers of current affairs and news, not as purveyors of random made up nonsense.

  12. Henry doesn’t do “facts”. They are much too boring as it is well known you can prove anything with facts. No, like all right whingers he deals in “truthiness”. In that “I just know I’m right despite all evidence to the contrary”.

  13. I guess the big difference between your graphs and the complaints is that people are complaining about residential rates and you are plotting total rates. Lies, damned lies etc.

    1. I agree, rates increases are out of control. For example, last my rates increased by …

      … hold on – I’ll just do the calculations…

      … 350 basis points. That just out of control! 🙂

      If it wasn’t for the Interim Transport Levy, they would have decreased by 85 basis points.

  14. it has long been true that local government and the public health service are easy targets for the naysayers because that they’re bloated over-spenders is axiomatic and self evident to any “right thinking” (you can read a pun there if you wish) citizen, the media or commentator regardless of any facts to the contrary

  15. Why do you have to ruin my Monday with this rubbish from May? I also wonder why it is that right wing tv personalities (I call them that rather than journalists), have last names starting with H: Holmes, Hoskings,Henry.

    I’ve always thought that the calculation of rates was tied to property/land values through government law. Additionally, demand is being heavily influenced by immigration, another government policy. A change of mayor wouldn’t alter either of these factors.

    Paul Henry talks in emotive language without facts and brings in one of the most opposed councillors he can find to interview. I’m sure both of these gentlemen are enjoying substantial increases in wealth through higher property prices. Why don’t they campaign to lower prices? Also the PT they decry is free to pensioners. Would they like to deprive them the use of it through the stopping of investment.

    Breakfast tv on both channels in now stuffed by these two ‘I’m all right Jacks’.

    1. Yes this is a point – Stu have you accounted for the fact that waste water costs came out of the rates and onto watercare bills post amalgamation?

      1. I see you have discussed water rates upthread and you don’t appear to have accounted for this. This will make a difference to the trend as pre amalgamation waste water was included on rates bills. For us this accounted for 15-20% of our rates bill. So I think you need to account for this somehow.

  16. Conclusion #1 is quite counter intuitive to me. While I the Herald’s narrative of constant ~9% rates rises across the city is clearly misleading and asinine, I thought that the council had been increasing rates by 2.5-3.5% every year. How is it that the current rates burden is similar to 2009 levels?

    Also, can we fully equate expenditures with revenue collection? Is there potential for the numbers to be distorted by the council using different financing tools in different years (i.e., undertaking more debt spending in some years than others), causing its expenditures to vary?

    1. One of my favourite Herald moments was when they splashed across the front page that tens of thousands of households faced 9% rates increases. This was backed up by numerous op-ed pieces decrying this over the next couple of days. A few days after the original article they published a tiny article in the bottom right hand corner of page 20 or something explaining that only 1500ish households were subject to the 9% increase. In the same paper were letters to the editor decrying the increase that were longer and had more presence in the paper. Truly abysmal reporting.

  17. Council are out of control on many fronts and weak arguments using numbers that are easily distorted by Council officers lacks credibility. For those who pay rates the reality is their rates are out of control. Playing with the numbers and being an apologist for the Council is just an insult to those struggling to pay with no hope of relief. As we all know the faceless bureaucrats are in control of the council not the politicians . This breaches a fundamental human convention of no taxation without representation. I know very well how Council works internally and those who believe what Council publish are very naive . Although I hate Henry and his type of brainless drivel he is actually right with his comments on this one,

  18. This analysis is hogwash. Forget the conspiracy theories, political labeling and lightweight journo comments. Residential rates are increasing massively (mine have nearly doubled since the amalgamation) but business rates are never going to reduce by anything approaching parity. It’s a massive media con. This so called “council” is most definitely out of control. We know this because of the number of unelected staff at semi corporate units of strategic council business. If you need any more convincing, take a look at this staff structure: https://fyi.org.nz/request/1964/response/6846/attach/html/3/Auckland%20Council%20org%20chart%20Sep%202014.pdf.html and be prepared to be shocked.

    1. I always love when we get people in visiting from Whaleoil, their aversion to facts make me appreciate the generally high quality of comments that we enjoy here.

      All of the regular posters have challenged specific sections of the work; pointing out some potential differences in the way rates are calculated by the author (water rates are the big one), or raising other questions around whether this analysis is actually useful.

      Some of our guests on the other hand have made no effort to support an argument that clearly isn’t supported by data.

      1. I think you’re flying a kite sailor boy. I have no interest whatsoever in whaleoil.

        I’m a hard working independent who thinks that local governance needs to be accountable. Regardless of any number of charts and data interpretation, (some of which I will admit to be interested in, particularly water rates which were itemised and included in North Shore rates and yet rates went up by more than inflation when water became the responsibility of and billed by Watercare, – which really was a brilliant bit of PR genius, the question remains, is Auckland Council out of control?

        In my view (and I am not a computer) it most certainly is and I base that partly on my bank statements which are usually pretty factual. If you are a sailor boy, you will probably know of Andrew Fagan resisting “Auckland Council” in this piece here:
        http://www.stuff.co.nz/auckland/71756644/Ex-Mocker-Andrew-Fagan-battles-Auckland-Council-over-hike-in-dinghy-fees.

        In fact Andrew Fagan isn’t resisting Auckland Council, he’s resisting an unelected council agency and therein lies the heart of the matter. I rented a locker at Birkenhead Point and put up with virtually no maintenance for years but decided on receiving my invoice after council harbourmaster duties were transferred to this agency, I was better off getting out. While this may seem trivial in the wider scheme of things, it’s a small illustration of where we are headed. I stand by my view that Auckland Council is out of control.

        1. Sorry, I forgot that you’re one rates bill is more representative than the entire rates bill for all of Auckland.

          We can talk about value from rates if you like, but that is an entirely different conversation.

        2. The government decreed the structure of Auckland’s local government, including the CCOs. Despite the name , Councillors have little control of them as you may have noticed.

          I for one thank Stu for providing actual information about rates, rather than emotive claptrap based on stereotypes about public vs private enterprise.

  19. And of course don’t forget the Transport Levy. This is not an increase in funding for transport, but by moving the revenue stream to a new “levy” the council reduced the amount AT recieves from the council by that amont. That way the rates go up by 9.9% or whatever not including the $230 plus dollars per year for transport.

    It is just fundamentally games to decieve the rate payers. The council is suppost to be our representative body, not some shady accounting firm.

        1. And here is a link to where the head of AT is quoted as saying the levy does not result in more cash coming into to transport.

          Would you like to comment on your understanding of the levy? Please, I am interested to know given this blog is about transport in Auckland. Did you also think it was a mechanism to increase funding. That the levy was in addition to the amount raised though council tax. Not instead of removing transport funding from council tax.

          Many thanks in advance

          http://www.joholmes.com/blog/transport-levy-fraud-revealed

          1. Yep, read it. And again it is clear you have not.
            It gives no explanation as to why .

            And to go back to my original point. The transport levy was not a mechanism to increase funding into the sector, but to give the impression that there was more funding into the area much greater than was the case.

            You are just a troll with no interest in debating issues to further discussion

          2. I feel I am arguing with an idiot and you are dragging me down to your level. There is a sentence, well done. But his does not explain WHY. Trolling or stupid.

            Again, back to my original point before you took me down down the Alice in wonderland rabbit hole, what was your understanding of the levy for transport introduced by the council. If you are unclear please refer above.

  20. Auckland Super City is out of control!!! Look at those graphs!!!! They can’t even collect rates properly!!! It’s their primary function and they can’t even do it as well as the rest of NZ!!! The super city was meant to perform better, but now they are woefully underperforming!!! Thank-you ATB for getting the message out there of how terrible Auckland Council is at collecting rates! With this indisputable statistical evidence we can call for Loopy Len to go and return to the good old days of John Banks and the good old white folks of C&R!!!

    *Is that enough exclamation marks or do ya’ll think I need a few more to get my point across?

  21. You can never solve this debate through economics. It always comes back to your own values. Those who work for government as employees or consultants/contractors always want larger government with more spending. Those who doubt the effectiveness of large government always want small government doing the the essentials and very little else. The idea that you can increase tax or rates and get a higher return always ignores diminishing returns. If you let them get too big they start doing stupid things like giving your money to David Beckham! But if you shrink it too small you miss out on the returns that a collective group of people can have over a bunch of individuals having to do everything for themselves.
    That said in my opinion Devonport Borough was more efficient than NSCC who in turn were more efficient than Auckland Council.

  22. Thank you Stu, I think that you have really informed us in a timely way of what is likely to happen over the next 12 months. I hope that you are able to expose other issues as they arise for the edification of people like me.
    1 I believed that the Super City would cost us a lot more with the super salaries than we had when we were smaller local bodies. Your graphs were impressive.
    2 I feel that the costs associated with amalgamation were understated at the time and as amalgamation was a Central Government imposition I believed it should have been carried by Central Govt but I understand that it wasn’t. So that may be a factor in the bulge.
    3 In Papakura we had low debt and very few (only one) “Leaky Home” so I felt that the lower Socio Economic areas were being brought in to spread the cost of that debacle.
    4 Those assets of the local areas that were brought in were used to subsidize those highly loan capitalised central suburbs. This changed the loan structure of the newly formed Super City.
    5 Papakura had it’s own water supply which had been leased to a private entity but was paid for separate from rates and was taken over by Water Care.
    6 In our areas and much of Manaukau residents looked after their own berms and have not had the service that caused so much furore in the inner city.

      1. Thank you Conan, that makes it look even worse than I had remembered when looked from the debt per resident. It sees ironic that the people making the most protest about rates seem to be those from the areas carrying the most debt into the Super City.

        1. Yes the residents of north Rodney especially with their demands to have their roads sealed because they get ‘nothing’. I’m planning to make a donation to the movement they have up there to leave the super city. As long as they take their debt with them it will be a win for the rest of the city.

  23. So sailor boy , you prefer facts. Heres some.
    FACT 1. You accuse people falsely that they are readers of whaleoil to disparage them
    2, when someone doesnt share your viewpoint you accuse them of not basing their view on
    facts. So in this case you read some published data and actually believe its correct
    Come on Sailor boy everyone else knows that Stats can be manipulated to achieve the
    desired outcome. Council are no different. You would have to be pretty naive to believe
    otherwise.
    3. Some people ,myself included have access to actually what is really happening behind
    the bullshit council dish out to naive people like you. We do not have to rely on
    disseminated information because we actually see it first hand. I contribute to this post
    to provide some balance and insight into how the world really works. Stick to your sailing
    sailor boy

  24. “Moreover, Auckland Council has previously made a strategic decision to shift the burden of rates away from businesses and instead onto residents (NB: Arguably residents end up paying for the rates levied on business activities anyway, through either 1) higher costs for the goods and services that they consume and 2) reduced employment and/or lower incomes)”
    Does anyone have a formula for why the proportions were adapted originally or why they are being changed now?
    Also the decision on the present valuation system as opposed to the (in the case of Papakura) unimproved value?

    1. I vaguely (and I mean vaguely) recall that in the former Auckland City Council (ACC) area, there was either a 2 to 1 ratings differential rule between businesses and residents rates or the plan to get to that level eventually.

      It was always easier for the councillors to slug the businesses with a higher differential than put up rates not least at it was residential ratepayers who voted them in or out.

      But I think the original rationale for it goes back many years, way before the SuperCity, when many people worked in the ACC area but did not live there (they commuted into the CBD from Manukau, Waitakere, Papakura or North Shore City councils for example.
      [and probably precedes that even to the days before the former ACC merger of the local borough councils in the late 1980s when the likes of Mt Eden BC, One Tree Hill BC, Mt Roskill BC, Newmarket BC, Mt Wellington BC and Mt Albert BC merged with Auckland City Council to form ACC].

      The argument was that all these folks (whether as workers or just as residents of Auckland still “consumed” services ACC provided/paid for from rates (even though these folks weren’t ACC rate payers – and the other councils would never ever agree to contribute to regionwide facilities (like the Aotea Centre, the museum, the orchestra (APO) or stadium upkeep, ferry terminals and particularly Britomart that were all in the ACC area and largely paid by rates of ACC residents.

      So, ACC said in essence because your businesses incur additional costs on ACC because of your location in ACC area and because most of your employees or customers are not, we will charge you a higher rate accordingly.

      So thats the nub of the source of that situation.

      Now we’re all in the one council, such differentials no longer strictly make sense, as now the “walls” have come down between the councils, the problem of getting each council to pay their fair share of the services of the others its residents use has disappeared, hence why the need for Business rating differentials to disappear.

      Meanwhile the legacy of the Balkanisation of the Auckland Councils remain with one obvious visual example being the lack of the motorway tunnels under Victoria Park for southbound vehicles when the northbound lanes where undergrounded.
      ACC couldn’t and wouldn’t pay for the southbound tunnelling on its own back (NZTA wanted $30m to pay for the difference between the current solution and what the net difference of the tunnel option would cost] all the other councils refused as they said it wasn’t their problem to solve and they all said well you (ACC) have the most to gain by doing it so you stump up the readies to NZTA.

      So, such intransigence means we’ll be stuck with a viaduct over that park for 50+ years more, because NZTA made sure the viaduct would last that long – talk about short sighted thinking. for a mere $30m we coulda had those tunnels.

    1. A large amount of rebalacning has been already done under Len Browns watch.

      The rest is being phased out at a removal rate of 0.5% of the current Business differential each year.for the next 30+ years. Once equilibrium is reached Business and Residents will pay the same rates for the same services.

      Its one reason why residential rates have been rising faster than expected because of the rebalancing of this differential that has taken, and is still taking, place.

    2. On that basis then it would be fair to argue that the business case for a Convention centre or the RWC or the hosting of the America’s Cup etc is a benefit to the business district and not the outer area’s so should be funded from targeted rate on the CBD. Another factor is the road maintenance which is the result of the axle loadings rather eg Heavy Transport rather than the bicycles.

      1. There already ARE targetted rates on CBD business, that pay for upgrades like Shared Spaces etc.
        And I think that business prefer that to a generic blanket differential.

        Whether the Convention Center should be paid for businesses other than SkyCity is different discussion.
        But given that SkyCities rationale for building it in the first place is to monopolise where the people who go to such conventions, each, sleep and gamble they should be the first port of call for any special rates levied as a result.

        Wider events like Americas Cup, RWC are usually handled by ATEED as a “Auckland-wide” beneficial event, so are part funded by everyones rates.

  25. I wonder if there is any analysis on the cost of making the PT fare Free?
    Would it be possible to that doing so would make the City congestion free or would that only lead to congested PT?
    IN my previous reading I was convinced that nominal fees are needed to send price signals which are able to modify the Peaks by spreading them but I’m just wondering whether even greater PT support from taxes would achieve a better result?
    http://farefreenz.blogspot.co.nz/

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