Zero rates plan scrapped

Residents in Christchurch face a rates increase of between 3.5 and 5.5 per cent next year to plug a $90 million hole in the city council’s purse left largely by the coronavirus pandemic.

Hopes for a much-vaunted lowering of the increase to zero have been dashed, with staff warning the policy would cause ‘‘unprecedented’’ redundancies, jeopardise projects and flout direct advice from the Government.

The authority also faces borrowing more than $100m over the next two years to pay for its coronavirus response and make up for an expected $61.8m in lost dividends from the trading companies it owns.

Slashing staff wage bills by not filling vacancies and reducing pay rises could save $5m under a revised annual plan, while trimming consultant budgets could save another $3.3m.

Controversial proposals are also on the table — a return to using glyphosate spray for weeding could save $3.5m, while reducing levels of dredging on the Heathcote River would cut spending by $2.6m.

But the budget also sets aside $118m for the Metro Sports Facility and stadium.

The preferred option of a 3.5 per cent rise equates to $1.19 a week, or $62.05 a year for the owner of an average $508,000 house in Christchurch.

Council chief executive Dawn Baxendale said the gravity of the situation faced by the authority and ratepayers from the coronavirus fallout left little choice but to cut a rise of 4.65 per cent proposed in February’s original draft annual plan.

In April mayor Lianne Dalziel promised she would be ‘‘laserfocused’’ on scrapping this year’s rates rise entirely to help people through the coronavirus crisis after six councillors publicly called for a rates freeze — though others later urged caution.

But later that month

Economic

Development Minister Phil Twyford issued a blunt threat that any move to cut rates to relieve financial pain for residents and businesses could jeopardise the Government’s willingness to invest in any proposed partnerships.

The cost of doing away with an increase was laid bare in a new draft annual plan that councillors will discuss tomorrow, including ‘‘severe impacts on both back office and frontline services, maintenance and capital works, as well as levels of service’’.

Ripping up the original annual plan, staff and councillors have spent the past month coming up with three options:

■ A 3.5 per cent rates increase — the preferred option — with $102m of borrowing, operational savings of $23m and $518m of capital projects being delivered next year;

■ A 5.5 per cent rates increase, with the $88m borrowings and the same operational savings and capital projects spend;

■ A 4.65 per cent rates increase, with $96m of borrowings and the same operational and capital figures.

For owners of an average

$508,000 house such rises would mean increases of 2.23 per cent,

4.05 per cent and 3.28 per cent respectively.

Councillors will now decide which option to approve before the plan goes back out to public consultation on June 12.