City's '8 big ideas' likely to lift rates

03:57, Jul 15 2014

Higher rates rises over the next few years could be the price residents have to pay for Wellington City Council's "eight big ideas".

Councillors have been warned that projects such as the airport runway extension, the Hilton Hotel and conference centre, and a film museum would not be sustainable without increasing the number of ratepayers - and even then "slightly higher rates increases in the short term" might be needed.

A presentation from council staff working on budgets for the next 10 years looks at various funding possibilities, one of which could be a rates increase above 10 per cent in 2015-16.

Another scenario, spreading out costs across the decade, involves an increase of about 6 per cent for 2015-16.

In recent years, rates rises have been held to about 2.5 per cent.

Chief financial officer Andy Matthews said yesterday that the city was in a "solid financial position", and the scenarios put before councillors did not necessarily mean rates would have to rise by the amounts given.


Rather, the examples were designed to show councillors how different combinations of projects and funding could affect rates.

"There's a whole lot of different scenarios we need to work through."

City council staff have started working on the next long-term plan, and briefed councillors late last month, laying out the financial environment.

The city was doing well after several prudent years, the presentation said. But it warned that slow growth meant the "increased expenditure programme" was not sustainable unless the council increased the number of ratepayers.

The council has already projected that more than 15,000 extra people could be living in central Wellington within 30 years, and a housing accord signed with the Government aims to build 7000 houses in the city within five years.

That would help fund more initiatives in the long term, but bigger rates rises might also be needed in the short term, the presentation says.

Any proposed increase would depend on which projects the councillors decided to prioritise, Matthews said. "We have got the ability to be able to both respond to and act as a catalyst for a growing economy."

The projects include the convention centre, runway extension and museums, as well as more cycleways and an Ocean Exploration Centre.

Matthews said the main message to councillors was that they would need to consider ways to increase their economic base to help fund those projects, especially given that the council was emerging from a period during which the emphasis had been on "fiscal prudence" rather than promoting growth.

"Having rates increases slightly higher than 2.5 per cent for a period might be appropriate."

Acting mayor Andy Foster said he did not believe councillors would agree to big rates increases, and instead predicted that "decision-makers would look to stagger increases".

Slightly higher increases to help fund projects that would boost the economy could be appropriate if they helped bring down rates in the future. "Any projects like that we have got to consider very, very carefully."

Councillor Paul Eagle said he would be opposed to funding big projects at the expense of social services, such as libraries or sports fields.

Any decision about big spending decisions would need public acceptance.

The Dominion Post