Archive | Finance

Robertson outlines focus shift from GDP measure to wellbeing

Finance Minister Grant Robertson outlined yesterday how the Government intended to revert to the 2002 version of wealth as a target for the nation – wellbeing, instead of gross domestic product.

In a speech to Local Government NZ’s annual conference in Christchurch, Mr Robertson said the coalition government elected last year recognised that it faced major challenges, and couldn’t tackle them alone. He outlined how central & local government could work together to achieve better outcomes for all New Zealanders.

The central focus of Mr Robertson’s address:

“For us in central government, this means doing things differently and measuring success differently.

“Previous governments have measured success in terms of economic growth – simple measures such as GDP (gross domestic product). But while measures like GDP remain important indicators of economic activity, they do not paint a full picture of people’s wellbeing or living standards.

“Many of our international peers have been envious of the GDP growth New Zealand experienced in recent years. But we’ve also seen increases in statistics that suggest that growth did not result in real tangible improvements to many people’s lives.

“For example, our levels of homelessness have been described as the worst in the OECD; the number of children living in poverty is not something we can be proud about, and tens of thousands of our young people are not in employment, education or training. This is not success.

“We believe that economic growth is a means to an end, not an end in itself. We are taking a broader view of success, by looking at how we improve the living standards & wellbeing of all New Zealanders.

“By placing wellbeing at the heart of what we do, we will be able to measure the extent to which our policies & investments are making real improvements to people’s lives.”

The living standards framework

Enter the living standards framework (LSF), which Treasury is developing: “The LSF uses a set of indicators for the current wellbeing of New Zealanders, and for their future wellbeing, based on the stock of the 4 capitals which determine intergenerational wellbeing: financial/physical, natural, human and social.

“This work will underpin our world-first Wellbeing Budget in 2019. This budget will be the first major step for the Government in applying a wellbeing framework to strategic decisions.

“Wellbeing is not only driven by central government actions. We recognise the crucial role local government plays in maintaining & enhancing New Zealanders’ wellbeing through the services, infrastructure, regulations & placemaking you provide to your communities.

“This was factored into the original Local Government Act 2002, by requiring local government to focus on promoting the social, economic, environmental & cultural wellbeing of communities, in the present & for the future. However, in 2012 the previous government removed these 4 wellbeings from the act, arguing that local government needed to be ‘streamlined’.”

Wellbeing bill before select committee

The Local Government (Community Wellbeing) Amendment Bill, which is before a select committee, is intended “to restore the wellbeing needs of communities to their rightful place as a central focus of local government decisionmaking, recognising the important role local government plays in ensuring people’s wellbeing.

“There is an obvious overlap with the 4 capitals of the Treasury’s LSF, meaning that both local & central government will soon be working with a closely aligned core focus on improving the wellbeing of our people.”

The power game

The Robertson line also shifts the use of power, which was firmly at the centre under the previous government, until long negotiations wrought change in the Auckland transport alignment project (ATAP) between the Government & Auckland Council.

That revised project was in sharp contrast to the approach of former housing minister Nick Smith over Auckland Council’s questioning of aspects of the government-council housing accord & special housing areas, where the minister told the council that, if it didn’t act quickly, the government would take over the housing area approval process.

Mr Robertson: “The relationship cannot be Wellington telling you what to do. Rather, we want to work with you to help deliver local solutions to local issues.

“For example, with our Provincial Growth Fund we aren’t taking a top-down approach. We aren’t interested in coming to tell you what you’re good at and what you should invest in.

“The ideas are better generated from the ground up. We want you to tell us what would benefit your region. That’s the only way such an initiative will work.

Funding solution required

“But we understand that for local government to be in a position to provide local solutions, you need the ability to finance them.

“We know there has been a huge increase in demand for investment in infrastructure all across the country.

“The previous government did not recognise the scale of development, maintenance & replacement of infrastructure needed to support a rapidly growing population and a surge in international visitor numbers.

“Infrastructure investment plays an important role in increasing housing affordability, by allowing for new developments to take place and catering for increasing demand on existing systems.

“We recognise there are some constraints that are preventing local authorities from effectively funding their obligations and from financing community expectations. Some of these can be described as ‘hard’ constraints, while others may be ‘soft’:

  • Hard constraints could be regulatory or legislative barriers that prevent local authorities being able to fund or finance infrastructure;
  • Soft constraints could be factors that influence the behaviour & practice of local authorities.

“Addressing the challenges of infrastructure funding & financing (IFF) is a key pillar of the urban growth agenda (the UGA). The UGA is an ambitious & far-reaching programme designed to improve housing affordability for New Zealanders by addressing the fundamentals of land supply, development capacity & infrastructure provision.

“IFF is specifically about reforming the existing system to provide a broader range of funding tools & mechanisms, as well as creating alternative financing models. The underlying question is whether there are funding or financing constraints hindering the timely rollout of infrastructure.

“Efficient construction of infrastructure in support of urban developments is, of course, a key determinant of the rate of land supply & therefore housing affordability.

“Different councils face different issues, yet affordability, availability of funding streams & appropriate pricing are key to any solution. We acknowledge that some high growth councils are up against their debt limits, so financing is the key constraint. That’s why we are also exploring the potential for diversifying the available sources of project financing.

“Project financing requires a dedicated revenue stream to service that capital; a revenue stream derived from charges for the provision of the infrastructure.

“The ability to identify & charge beneficiaries influences the viability of those projects, and so provides an important signal as to which projects should proceed & when. So, there is an efficiency element to this work as well.

“Central government will be exploring ways to get past funding & financing barriers. Yet we cannot do this in isolation. This is about partnering with local councils to ensure that you have the tools to provide the much needed infrastructure for your communities.”

Link:
Finance Minister Grant Robertson, 15 July 2018: Full speech to Local Government NZ conference

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Robertson speech.

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Finance minister calls Productivity Commission in to examine local body funding

Finance Minister Grant Robertson.

Finance Minister Grant Robertson said yesterday the Productivity Commission would hold an inquiry into local government funding & financing.

The inquiry will investigate the drivers of local authority cost pressures and provide recommendations for how councils can maintain & deliver services & infrastructure in cost-effective ways.

Addressing the Local Government NZ annual conference in Christchurch, Mr Robertson said: “The Coalition Government has highlighted right from the outset our determination to help local government address the varied increasing cost pressures they have faced in recent years.

“The Coalition Agreement between Labour & NZ First stated that we will hold a public inquiry ‘a decade after Shand’ to investigate the drivers of local government costs & its revenue base.

“Cabinet has agreed the terms of reference for the Productivity Commission inquiry. The commission will be able to build on its previous inquiries into urban planning, housing affordability & local government regulation.”

Mr Robertson said the terms of reference would be released shortly. They require the commission to investigate cost pressures, funding & financing models & the regulatory system for local government.

These include investigation into:

  • Cost & price escalation for services & investment, including whether this is a result of policy &/or regulatory settings
  • Current frameworks for capital expenditure decisionmaking, including cost:benefit analysis, incentives & oversight of decisionmaking
  • The ability of the current funding & financing model to deliver on community expectations & local authority obligations, now & into the future
  • Rates affordability now & into the future
  • Options for new funding & financing tools to serve demand for investment & services. This will appraise current & new or improved approaches for considering efficiency, equity, affordability & effectiveness, and how the transition to any new funding & financing models could be managed, and
  • Constitutional and regulatory issues that may underpin new project financing entities with broader funding powers, and
  • Whether changes are needed to the regulatory arrangements overseeing local authority funding & financing.

Mr Robertson said: “Since the Shand report into local government rates in 2007, local government cost pressures have grown significantly and by more than other costs faced by ratepayers.

“The pressures faced by local councils vary significantly, whether it’s the provision of infrastructure due to growing resident populations, or provision of tourism infrastructure against decreasing rating bases.

“The scale of this issue means an in-depth look is needed into whether our current structures are fit for purpose, and to identify how central government can help by cutting red tape, improving regulation and taking pressure off local government.”

The Shand Report

The Funding local government report resulted from the local government rates inquiry conducted by chair David Shand, Ernst & Young national real estate group head Graeme Horsley & Massey University associate professor Christine Cheyne. They made 96 recommendations in their 2007 report.

Links:
2007 Shand Report – local government rates inquiry documents
Department of Internal Affairs: Local government funding project

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Ministerial release.

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Council bond issue fully subscribed

Auckland Council’s offer of $200 million of 5-year unsubordinated fixed-rate vanilla corporate green bonds opened last Monday and closed fully subscribed on Thursday. They’ll be issued on Wednesday with a maturity date of 27 June 2023.

The interest rate is 3.17%/year, reflecting a margin of 0.5%/year over the swap rate for the 5-year period.

The bonds will be quoted on the NZX debt market (NZDX).

Attribution: Council release.

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Council considers green bonds for infrastructure funding

Auckland Council said on Wednesday it was considering issuing $NZ green bonds and intended to be the first council in New Zealand to establish a green bond framework.

Mayor Phil Goff said the prospect of green bonds was prompted by the significant investment the council needed to make in infrastructure to lower emissions and to adapt to climate change.

Green bonds are vehicles for raising funds which are invested in assets & projects which have positive environmental & sustainability impacts. They’d allow the council to diversify the pool of funds available to it by tapping into investors who wish to fund ‘green’ infrastructure assets & projects, but otherwise might not invest in infrastructure.

“We are investing significantly in our water infrastructure, to clean up our harbours & waterways, and in public transport infrastructure to reduce emissions & decongest our roads. These projects are an attractive investment opportunity for investors who are allocating larger segments of their portfolios to climate change & green investment activities.”

Attribution: Council release.

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Infrastructure funding requires most scrutiny in mayoral budget

Auckland Council moves forward on Monday with approval for public consultation of the mayor’s budget & long-term plan proposals, as altered in a committee meeting then signed off by the council’s governing body on Monday afternoon.

The documents still have some way to go before being implemented, which will happen on 1 July 2018, days after the final council signoff.

The mayor, Phil Goff, unveiled his proposals a week ago and the detail is all contained in the agenda for Monday’s finance & performance committee.

I’ve entered the many links below, including:

  • the proposals for improving water quality – forever underbudgeted
  • how he proposes to tax non-hotel short-term accommodation providers
  • a proposal to eliminate Auckland Council Investments Ltd, one of the council-controlled organisations devised when then-Act Party leader Rodney Hide, as local government minister, looked for ways to separate council & policy from commercial business management
  • waste management service charges, and
  • finance growth infrastructure.

Auckland Council Investments (ACIL) owns Ports of Auckland Ltd on behalf of the council, and also holds the council’s 22.3% shareholding in Auckland International Airport Ltd. Mr Goff says in his proposal the council could save $1 million/year of opex, but would first need to clarify port company & council roles.

Growth infrastructure funding requires careful scrutiny

The most startling event in all of this comes under the low-key title of “finance growth infrastructure”.

A better system than the old one-off local authority bond issues came in 2009, when the Local Government Funding Agency was formed, and it now has billions of dollars of bonds listed on the NZX to support activity by various councils.

Even so, Auckland Council has been hamstrung for the last 2 years after getting perilously close to its debt ceiling, but with no solution in sight to mounting infrastructure requirements.

The previous government helped out with its Housing Infrastructure Fund, but that never looked like an ongoing, considered solution.

In the mayor’s proposal now, the specific example given for support through the infrastructure partnership model (with the Government) is Watercare’s $1.1 billion Central Interceptor wastewater project, which would facilitate isthmus intensification while also reducing overflows into the harbours.

As with some other mayoral proposals, targeted rates are a preferred option. Making land more useable is one reason for a targeted rate, but making the harbours cleaner redirects the benefits.

This makes it critical that Auckland residents examine how & why funding should be provided, and whether people targeted with project-specific rates will have an option to contest imposition of both the bill & the project.

Agenda items, Auckland Council finance & performance committee, Monday 11 December at 9.30am, Town Hall:
9, 10-year budget 2018-2028 – process overview
Attachments
10-year Budget 2018-2028 – roadmap
10, 10-year budget 2018-28 – mayoral proposal items for consultation
Attachments
Mayoral proposal – 20-year budget 2018-28
Transport funding
Transition policy [published separately]
Water quality improvements programme
Natural environment initiatives & funding
Rating of online accommodation providers
Auckland Council Investments Ltd review
11, 10-year budget 2018-28 – other matters for consideration
Attachments
Waste management service changes
Regulatory fees & charges
Land advisory fees & charges
Business improvement districts (bids)
Rodney Local Board transport targeted rate
Panuku programme options
City centre timing & 2021 events
Non-strategic asset sales
Coastal management
Financing growth infrastructure
12, Local rates pilot

Attribution: Council committee agenda.

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Goff focuses on infrastructure – traffic, housing, and including water quality

Auckland mayor Phil Goff unveiled his proposed 10-year budget yesterday to a mostly welcoming council chamber.

He’s focused on increasing infrastructure spending to ease traffic congestion, improving housing affordability and cleaning up water quality in streams and on beaches.

The average rates increase would be 2.5% for each of the next 2 years, rising to 3.5% for the following 2 years.

“This 10-year budget will see Auckland Council’s transport infrastructure spend increase to $11 billion over the next decade. The investment is critical to ensure our city, with increasing population and cars on the road, doesn’t grind to a halt.

“We’re working with Government to introduce a fairer revenue source in the form of the regional fuel tax. This means we can remove the $114 interim transport levy, which doesn’t raise enough money and is unfair in how it impacts on retired folks and others who make less use of our roads.

“Accelerating investment in our transport network is critical to address congestion and to allow the development of brownfield & greenfield sites to increase the supply of housing.”

The budget proposal will go through 2 council workshops before approval on 11 December of the document to go out to consultation. The consultation period will run from 28 February-28 March, the final budget will be endorsed by the council at the end of June and it will come into effect on 1 July 2018.

Link: Auckland Council’s 10-year budget proposal

Attribution: Council committee meeting & council release.

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Council valuation shows outer suburbs hit harder this time

Outer suburbs have captured more of the rise in Auckland’s property values in the latest 3-yearly valuation, dated 1 July and released (in broad terms) yesterday.

As it’s the value movement compared to what’s happening in other suburbs that determines whether the share of rates rises or falls, that means it’s the outer suburbs that are more likely to face higher rates increases.

That’s in contrast to the 2014 valuation, when residents in central suburbs were up in arms at facing a bigger increase in rates bills because their property values had taken a hike.

Property owners will receive their valuation notices from Auckland Council in the mail or via email from next Monday, 20 November.

The average rise in Auckland property values across all market sectors since 2014 was 45%. For residential it was 46%, commercial 43%, industrial 47%, lifestyle properties 57%, rural 35%.

Auckland Council chief economist David Norman said the rise in residential values reflected at least 3 things: “First, Auckland’s strong population growth over the last 3years has not been matched by increases in the number of new houses being built, and this has pushed prices up. Second, record low interest rates have allowed people to bid up prices to secure somewhere to live because housing has been in short supply. And third, the unitary plan has added a lot of value to properties that can now carry higher intensity residential development than before.”

Mr Norman said the largest movements in the outer suburbs appeared to be a result of higher demand in areas where property was less expensive.

Local board areas with the largest movements – an average over 45% – are in Waiheke, Otara-Papatoetoe, Papakura, Mangere-Otahuhu, Manurewa, Henderson-Massey, Maungakiekie-Tamaki, Franklin, Howick, Rodney & Upper Harbour.

Movements within the remaining boards ranged between 11-44%.

The rates impact

Auckland Council head of rates Debbie Acott said a big increase in property value wouldn’t necessarily mean a corresponding increase in rates: “We expected to see an increase in valuations since the last revaluation in 2014, so movements in the 40-50% bracket really aren’t a surprise.

“Generally speaking, the values in Auckland’s outer suburbs appear to be catching up with the 2014 revaluation.

“Areas that increased the most in the last revaluation – by & large central Auckland – are now moving roughly along the average. Those that didn’t last time – mainly outer Auckland – are the ones with the highest increases this time.

“Property valuations are used to help us work out everyone’s share of rates – they don’t mean that we collect any more money. However, we won’t know the impact of this revaluation on rates until we agree our next budget in 2018.

“Because of Auckland’s dynamic property market, and valuations only capturing a moment in time, they should not to be viewed as current market value.”

The council revalued 549,000 properties, including every piece of land except roads & waterways.

Individual property data will be available from next Monday, 20 November, at the Auckland Council website.

Before valuations are finalised, they have to be approved by the Valuer-general, who’s responsible for authorising rating valuations for the Government.

Auckland Council uses capital value, or CV, as its rating valuation method, measuring the likely price the property would have sold for on 1 July 2017. The new values will be used to help set rates for the 3-year rating period beginning on 1 July 2018.

The council didn’t mention it, but many people refer to the council valuation as CV as if it’s a valuation that’s updated outside the rating valuation process.

Links:
Individual property data
Indicative residential average change in capital value since last revaluation
Notes to indicative residential average change

Earlier stories:
29 June 2015: 2% get big rates hike, 22% get cut
25 June 2015: Council approves rates, transport levy & long-term plan after 2 close shaves
23 June 2015: Flurry of targeted rates will distort rates bills
19 November 2014: Council will recommend end to rates caps, but the vote was close
8 November 2014: Brewer pushes for higher uniform charge in rates bill
6 November 2014: 3.5% average Auckland rates rise now proposed
20 August 2014: Auckland valuations used as rates basis rise average 33% in 3 years

Attribution: Council release.

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Council accounts show revenue & assets up, net debt below forecast

Auckland Council released its unaudited financial results for the June year to the NZX yesterday (because the council has listed debt securities), with more detail to come in 4 weeks.

The deputy auditor-general will complete the audit and issue an audit opinion on 28 September.

Group highlights include:

  • Revenue up 11% ($424 million) to $4.129 billion, ($3.705 billion in 2016), including
    • Rates $1.641 billion ($1.564 billion)
    • Fees & user charges $1.193 billion ($1.083 billion)
  • Operating surplus $340 million before gains & losses ($250 million)
  • Net debt (after cash on hand) up $486 million to $7.969 billion, but $467 million lower than forecast
  • Surplus after tax $640 million ($231 million deficit)
  • Total assets up $2.7 billion to $47.36 billion ($44.68 billion)
  • Net assets $35.78 billion ($33.65 billion).

Auckland Council Group acting chief financial officer Matthew Walker said the group’s financial performance “shows it is balancing the need for prudent financial management with the investment required to address the growth challenges Auckland faces.

“As a successful & increasingly global city, Auckland’s population is growing rapidly. This continually adds to the demands on our transport, 3 waters & community infrastructure such as libraries & parks. Yet the group results show the council is on track to deliver its largest programme of investment ever over the next decade, based on the adopted 2015-25 long-term plan.

In the last year, the council group (including council-controlled organisations such as Auckland Transport & Watercare Services Ltd) delivered $1.66 billion of investment, including its share of the city rail link, now co-funded by Auckland Council & the Government.

Mr Walker said the council sold down part of its diversified financial assets portfolio in August 2016 and issued debt in $NZ, Euro, Norwegian kroner & $A. Meanwhile, it continued to raise debt through the Local Government Funding Agency. He said low interest rates had contributed to a lower cost of funds during the course of this financial year.

“The council maintained its credit ratings of AA (stable) from Standard & Poor’s, and Aa2 from Moody’s Investor Services, confirming our prudent fiscal management and strong debt-servicing capability. These continue to remain among the strongest credit ratings in New Zealand.

“The council has begun the development of its long-term plan 2018-28. While group debt is projected to reach $11.6 billion by 2025, it will remain at a prudent level relative to our income.
“The group’s asset base is expected to grow from $45 billion to $60 billion over that same period to 2025.”

Capex highlights:

  • $310 million on water & wastewater infrastructure
  • $200 million on parks, sports facilities, libraries, community centres & facilities
  • $430 million on roads & footpaths, and
  • $288 million on public transport.

Link: Auckland Council 30 June 2017 accounts (on NZX)

Attribution: Council accounts & release.

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Council agrees to sell rest of its financial asset portfolio

Auckland Council’s finance & performance committee agreed yesterday to sell the final $130 million in its diversified financial asset portfolio, but it’s a decision with potential adverse consequences.

The council sold $100 million of the portfolio in May 2016, will sell a further $100 million by the end of the June 2018 financial year and agreed yesterday to sell the balance by June 2018.

The council intends to use the proceeds solely to fund public transport & stormwater infrastructure.

However, turning liquidity to use in developing hard assets could take the council closer to a net debt:total revenue ratio of 270%, and at that point the council would face a ratings downgrade.

Council treasurer John Bishop said in his report a one-notch downgrade would cost $12 million/year in extra interest costs.

Committee chair Ross Clow said the decision to divest the portfolio would help tackle Auckland’s growth: “The fund was originally set up with the express purpose of funding infrastructure across the region when needed. Given the unprecedented challenges Auckland faces, divesting of the remainder of the portfolio and using it to help fund our infrastructure programme is a prudent & sensible financial decision.”

Mr Bishop said in his report the investment fund wasn’t regarded as a strategic asset, and divesting it would give the council the opportunity to repay debt to enable additional investment in infrastructure. “However, replacement liquidity may be required to meet treasury operating limits.”

The Auckland Regional Council established the portfolio, which originally contained its stakes in Ports of Auckland Ltd & Auckland International Airport Ltd, along with an investment portfolio of New Zealand & global equities, bonds & cash. It was used it to establish Infrastructure Auckland, providing seed funds for projects that included the Britomart Transport Centre and the Northern Busway.

It’s been managed recently by 8 external fund managers, with oversight from National Australia Bank subsidiary JANA Investment Advisers Pty Ltd.

Mr Bishop said in his report: “If the portfolio was liquidated to fund a wider Auckland or New Zealand event, it is likely that financial markets would also be negatively impacted. Therefore, when the funds are needed the most, there would be likely downward pressure on the value of the portfolio, meaning the portfolio is a less preferred form of liquidity when compared to cash or committed bank lines.

“Its specific investment objective was to achieve a net return exceeding the consumer price index plus 4% over rolling 10-year periods. JANA estimates an average annual 7% return over rolling 10-year periods. The portfolio has returned 9.1%/year since November 2010, in line with benchmark & ‘market’ returns. The return for the financial year to 31 March 2017 is 5.8%.”

Both EY & Cameron Partners identified the portfolio in their reviews of council funding in 2015 as a commercial rather than strategic asset, meaning continued ownership wasn’t required to ensure delivery of key services or outcomes.

“It was noted that the rationale for holding the portfolio is weak, and it is unusual for an organisation with the objectives of Auckland Council to hold such an asset.”

Mr Bishop said alternative uses for the portfolio funds included repaying debt and accelerating infrastructure investment. However, additional liquidity support might also be required if the portfolio was divested.

“Selling it to repay debt will reduce the risk of a downgrade to the council’s credit rating profile. Under the council’s long-term plan, the ne,t debt:total revenue ratio reaches 265%, meaning little available capacity to undertake further capital investment other than what is already in the long-term plan without breaching this ratio.

“The council’s credit rating agencies have indicated downward ratings pressure if this ratio approaches 270%. Therefore any unforeseen changes to planned operating results, such as a reduction in revenue or increase in debt, could lead to a lower credit rating.

“A one-notch downgrade is estimated to cost the council a minimum 0.15% in higher interest costs, while a bigger downgrade will result in a greater increase. On the council’s current debt portfolio of $8 billion, this results in an additional $12 million/year expense once existing debt is refinanced, more than offsetting the positive return from the portfolio over time.”

Mr Bishop said that as the investment portfolio was reduced, the overhead costs (both internal & external) of administering it became more significant: “Current external overhead costs are about $1.5 million, largely represented by fees paid to JANA & the fund managers. The refined responsible investment policy also requires significantly more oversight of the portfolio, adding additional cost and diverting council staff focus away from more material matters such as managing the council’s debt portfolio, interest rate expense & credit rating profile.”

Earlier stories:
4 April 2008: Auckland Regional Holdings’ “satisfactory” half sees revenue up 45%, profit up 55% to unstated figure
2 March 2004: Auckland gets Infrastructure Auckland $45 million for interchange

Attribution: Council committee agenda & release.

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Council 2.5% rates rise & tourist-targeted rate pass

Auckland mayor won approval yesterday for a 2.5% overall lift in the rates bill for the financial year starting on 1 July, got support for the council to pay staff the “living wage” at a minimum and won what could have been a tight vote on a version of bed tax.

The bed tax will actually be a targeted rate on certain accommodation – large hotels in particular. Against claims that it might be challenged as unlawful, Mr Goff said the council had been advised that the targeted rate was a legitimate device and that it could be passed on to customers.

I’ve long questioned a bed tax as a measure of charging visitors – who you want to like you – fees on top of their already very large input into Auckland’s income, and pouring billions of dollars into Government coffers through gst.

That’s the nub of the split between supporters of a charge on tourists and opponents: the Government takes tax without having to lift a finger, but has been loathe to redistribute it – until pre-election time.

The tourist accommodation targeted rate is intended to support operation of council organisation Ateed (Auckland Tourism, Events & Economic Development Ltd), which many condemn as an unnecessary & extravagant addition to council costs. I’ll come back to that issue another day, but for the moment argue that it has value in raising the region’s economic output.

For a long time council & government talked past each other on funding, but that changed when they jointly worked on the Auckland transport alignment project last year. Although improved funding mechanisms appear to be some way off, the 2 organisations are at least still talking about it.

The budget – the council’s annual plan – returns to the council chamber on Thursday 29 June for endorsement once staff have worked through all the decisions made yesterday.

Links:
12, Final annual budget 2017-18 – Mayoral proposal   
Attachments:
Annual budget 2017-18 – Key budget & rating issues
Other rates policy issues
Implementing a living wage

Attribution: Council meetings.

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