Rates increase low - for now

BY MICHAEL KOPP

In a local body election year, Greater Wellington Regional Council is offering a rates carrot to a financially-strained public, but says heavy increases are still to come.

GWRC slashed its proposed rates increase for the financial year beginning July 1 to just one-fifth what it projected in its 10-year plan, because of the recession, councillors say.

GWRC chairwoman Fran Wilde echoed her own and councillors' fears over last year's rates increase of just 3.8 per cent, GWRC chair Fran Wilde said in a press release.

''Obviously an increase of nearly 11 per cent in the current economic climate was unacceptable.''

That was despite the fact most of the increase was for service improvements, especially public transport and flood protection, she said.

GWRC would still deliver them by tightening up its belt in other operations.

But GWRC's CEO David Benham told a full council meeting last week rates will have to rise back to at least the projected 9.4 per cent in 2011-12 and successive years to pay for new trains and increased water costs.

The council's budget includes a $2.4 million increase for the current TranzMetro rail service contract, which requires GWRC to make up the difference to the operator between fare revenue and actual costs.

GWRC admits it doesn't understand why and how.

Fare revenue has been declining steadily during a year of infrastructure upgrades and bad service.

GWRC is counting on the new Matangi trains to draw the lost patrons  and more new ones  back to rail and produce greater income from a 3 per cent patronage increase.

But the council is also projecting a 3 per cent per year increase in fares it acknowledges will reduce the drawing effect of the new trains.

Ms Wilde told last week's full council meeting ''we will be in big trouble'' if the expected rail patronage doesn't materialise.

She said the council hoped they came back when the trains are more reliable.

GWRC says the rail patronage drop will continue for at least another year.

It proposes its overall rates take for 2010-11 will rise by 2.2 per cent, but the impact will vary across the region from $2.48 to $8.25 (including GST) per property, because of differing valuations.

Total rates, including general and water levy, will rise just 1.7 per cent, because GWRC has cancelled a projected 5.5 per cent water levy increase.

It was achieved by squeezing and rejigging GWRC's transport operations, which accounts for half of rates, for $4.66 million in savings, and other departments for $2.24 million.

But GWRC is still spending an additional $50,000 on the Wellington Regional Strategy organisation Grow Wellington, which receives about $5 million per year and is not due for review for some time.

It also voted to spend $871,000 over the next several years on completing the flood defences of the troubled lower Waiwhetu stream project, which just suffered a budget blowout from $14 million to $21 million because of the toxic sludge cleanup portion of the project.

Councillors were adamant the cleanup funding was Hutt City Council's responsibility. $1.5 million of the ''savings'' is a windfall gain from not having to pay contracted bus services for three main routes in the Hutt Valley, where City Line has agreed to run the routes as fully commercial.

But Upper Hutt actually has a heavier transport rates hit because of the new contracted Emerald Hill bus service.

The Wairarapa's transport rates will be down in 2010-11.

The bulk of the transport rates are paid by Wellington city dwellers.

GWRC will still require huge rates increases of up to 15 per cent in some of the next 10 years to pay for GWRC's share of a $2 billion-plus regional transport infrastructure and water supply.

The transport ''savings'' include $1.35 million in not having to pay for maintenance or debt servicing on the new Matangi trains.

 They were due early this year, but will not now enter service until later.

And $0.58 million will not be spent on the real time information system next year, and $0.6 million ''savings'' on cheaper diesel fuel  which could rise in price overnight as it did two years ago, when GWRC had to levy an emergency rates increase to pay for skyrocketing oil,  and then didn't need it as oil plummeted with the recession.

So another $2 million rates ''savings'' will come from using money left over in the transport reserves fund, which is kept to pay for oil shocks.

Locked-in spending in addition to capital spending includes 10 per cent of $53 million KiwiRail projects; 50 per cent of $4.5 million Wellington trolley bus infrastructure; 10 per cent of $132.8 million on the Matangi trains; 10 per cent of $8.4 million to prototype the possible refurbishment of the Ganz Mavag trains; and $40 per cent of $3.4 million for ''heavy maintenance''.

Ms Wilde said risks to the council being able to deliver its proposed budget for the forthcoming year include movements in oil prices and interest rates, rail track access charges and infrastructure costs, lower income from resource consents, higher than expected inflation, and natural disasters such as floods.

GWRC is conducting its annual fares review at the moment. Deputy chairman and transport and access committee chairman Peter Glensor amended the motion to pass the rates increase to include a review of the formula by which transport rates are determined.

GWRC is caught in a bind between the National Government's desire to have at least 50 per cent of the cost of public transport  mostly rail, which needs subsidies, as opposed to buses, which mostly pay for themselves  paid by fare-box collections, while GWRC policy has over recent years kept the fares percentage down to 45 to 47 per cent.

The balance of the operating costs  mostly for rail  has to be made up from property owners' rates  a sore point for those who believe they are subsidising services they don't and won't use.

If GWRC holds to just a 3 per cent fare increase per year, it calculates, the fare-box contribution could fall to just 43 per cent, and if there are no fares increases, to just 36 per cent within 10 years.

Complying with the Government  if it does demand 50 per cent   would seem to mean increasing fares much higher than 3 per cent per year.

GWRC also bases its fares on a continued insistence that public transport costs to the user should be, and are, no greater overall (both short and long trips) than the use of private cars.

- Hutt News