High oil prices may raise rates and transport costs

Record oil prices could hit Wellington regional ratepayers hard this year, with a proposed 6.8 per cent rates rise and a 10 per cent increase in bus and train fares.

Greater Wellington regional council said yesterday that it was considering the rates rise for the 2008-09 financial year, largely as a result of rising oil prices that peaked at more than US$100 a barrel last week.

"Transport is going to bite our rates for some time to come," council chairwoman Fran Wilde said. "We have to do it. Public transport and our roads are being improved over the next decade. We are in catch-up mode."

Rising transport costs, in particular diesel to fuel the region's buses, account for 40 per cent of the proposed rates rise.

Flood protection, the second- biggest factor in driving up the rates, accounts for less than half that.

The planned rate increase will have differing effects on property owners throughout the region, depending on what rates or charges are applied for local needs, as well as changes in capital values.

Ms Wilde said increases could be as low as $7 or as high as $20 a year.

"We're not talking about hundreds of dollars," she said.

The proposed September 1 fare increase coincides with a bid to get more people to use the region's buses and trains. The last time fares went up, the use of public transport dropped.

"There is always an immediate drop when there's a fare increase," Ms Wilde said. "The question is getting the balance right.

"We don't want to turn people off using public transport, but on the other hand we do think users will need to pay some of it."

Wellington Mayor Kerry Prendergast said it was a "difficult balancing act" to increase fares.

"If you put fares up too much people move back to their cars, so I hope they [the regional council] have been mindful of that."

The regional council will consider the proposed annual plan on March 19, followed by a public consultation process with submissions to be heard on May 21 and 22.

The final annual plan is due to be approved on June 30.

Ms Wilde said that the proposed rate and fare increases were not set in stone. "This is a proposition, this is not a decision."