Monday 13 November 2017
Statement by Mayor Andrew King:
This morning Hamilton City Councillors were briefed on rates options to make the most of the opportunities, and tackle the challenges, our city faces. This draft budget presents the biggest investment ever in the future of our city. Together, the Council and our community have some big decisions to make.
I don’t believe we should leave this to a future council. Putting off the tough decisions now will only leave a larger burden on ratepayers later and make it harder for our residents to get on the housing ladder.
The right decisions in the coming weeks and months could save our city’s ratepayers millions of dollars in the future. They will allow us to take advantage of opportunities such as the Government’s Housing Infrastructure Fund (HIF) and cater for community facilities and roading improvements.
Growth is presenting us with enormous opportunities but we have to do it right. Opening up planned areas for growth in Peacocke, building a new bridge over the Waikato River, supplying the water and wastewater infrastructure and building the roads we need will cost hundreds of millions of dollars. The HIF offers us an interest-free loan and conservatively would save this city and its ratepayers $70 million.
We also need to deal with existing roads, footpaths and public transport facilities and invest wisely now to avoid the future congestion issues we have already seen in other growth areas of New Zealand.
Today’s briefing was very clear: delivering this for Hamilton will require a substantial rates rise. The briefing indicated a rates rise of an average 16.5 per cent, but it must be noted this is a very early stage and there are many decisions to make before a final budget is adopted and rates are set.
We also discussed a change to immediate capital value rating, and the effect of smaller rates increases in stages. Severe reductions in the facilities and services we provide to our community could reduce this increase and that is something Councillors and our community will have to weigh up.
To pay for the things our community wants and needs, and properly manage and support the growth of our city, we need to be financially sustainable.
Hamilton’s rates are substantially lower than those of our neighbours and other growth councils in New Zealand. Quite simply, our rates are too low and haven’t been covering our everyday costs. We have been using debt to meet this shortfall and that’s not sustainable in the long term.
High levels of additional funding due to high growth has masked the extent of this underfunding and from 2012 to 2016 we used $48 million of debt capacity to meet the everyday running costs of the city. If this doesn’t change, that figure is only going to grow. That’s tens of millions of dollars that won’t be available for new roads or footpaths, managing growth or providing community assets for our residents and ratepayers.
Our previous financial strategy was set during the global financial crisis, a time of low growth. Accelerated growth means we need to be aware of what’s changed in the past six years, and what new opportunities we have.
As Mayor, I have the responsibility to lead the 10-Year Plan process for the Council, but the decisions we must make are not done in isolation. Councillors and I have received months of briefings and detailed information on virtually every aspect of the Council’s operations and the multitude of services provided for the people of Hamilton.
Our Chief Executive has proposed a comprehensive review to save $5 million in Council’s costs through innovation. Any savings over the $5 million will pay down debt. We will be working hard to collaborate with the new government on additional funding opportunities such as a regional fuel tax, infrastructure bonds and loan structures to reduce any rates increase for Hamilton.
The facts are clear, and I believe we simply have to get on with it. Sometimes as city leaders we need to make unpopular calls that we know are right and I think this is one of those calls.
The initial 10-Year Plan budget will be further developed and discussed in coming weeks and months and there will be many opportunities for individuals and groups to give their views on what should be included in the plan.
The draft plan will be presented to Council on 6 December and I have no doubt there will be intense Councillor and community debate about what our city needs to do.