Courage needed on city rates blow-out

Can Christchurch city councillors curb their enthusiasm to spend more of your money? Courage and resolve are sorely needed around the council table as they ready to finalise their long-term plan (LTP).

The latest consumer price index data underscores that council rates remain one of the most inflationary contributors to cost-of-living pressures, with the flowon effect of fuelling rent rises too. It is mission-critical that local government plays its part in taming inflation. Double digit rates rises scream “greed-flation” to me, perpetuating the climate of pain in a vicious cycle.

Just as the Government has ordered 6.5% in operational savings from public sector budgets, why hasn’t the same hardheaded efficiencies drive been undertaken by councils?

As it stands, the proposed 13.24% annual rates increase is grossly unacceptable – irrespective of how it compares to other councils. The local government landscape is riddled with mediocrity. There’s every chance Christchurch’s projected rates increase could grow even larger, if the grasping demands for multimilliondollar hand-outs from the likes of the Arts Centre find favour with a majority of councillors.

Don’t forget - every $6 million in additional operational spending equates to a 1% annual rates increase.

Then there’s Cr Sara Templeton’s pet project, a climate levy, which would pump up rates a further 1-2% over 10 years, for her climate disaster fund. We don’t have a dedicated earthquake levy or fire levy or flood levy tagged on rates – nor should we have a climate levy. The draft LTP’s 10-year capital programme has already allocated over $1b to enhancing sustainability and resilience across the city’s infrastructure.

So if the political will is there, where can changes be made to claw back the annual rates rise into single-figure territory? Curbing the council’s “great provider” role, by substantially reducing its annual grants provision, would be a great start.

In addition to ending the duplication of urban development roles, ChristchurchNZ and Venues Ōtautahi should be merged into one leaner entity, requiring considerably less council funding.

A fortnight ago, a majority of councillors voted to demand an additional $18m in dividends from Christchurch City Holdings Ltd (CCHL) for the coming financial year. Pleasingly, that should knock 3% off the proposed annual rates rise, lowering it to 10%.

But this also risks forcing CCHL to sweat its assets, and hobbles its ability to pay down debt. Last year’s cliffhanger vote that torpedoed CCHL’s business case for active portfolio management was a foolish decision which needs revisiting postelection.

Another key area where savings can still be achieved is through demanding greater staff efficiencies – just as the Government is doing.

The draft LTP trills that “the council has identified a combination of operational cost savings and additional revenue of $41m, including $6m in 2024/25, without impacting on service levels”. That is miserably small beer, given the 10-year operating budget is $16.8 billion.

Finance and performance committee chair Cr Sam MacDonald is up for that. He wants to increase staff vacancies (a hiring freeze) and reduce back-office costs.

Then there’s the monumental opportunity to swing the axe through the council’s ideologically-driven transport budget, given the likes of cycleways won’t continue reaping hefty funding subsidies from the NZ Transport Agency.

MacDonald says “a large portion of the $200m planned cycleway projects will not be co-funded”. “It would be terrible if the council decided to fully fund them when they’re despised by so many residents.”.

MacDonald is gunning for a rates rise of 7% or below (which accounts for inflation and Te Kaha.) “As soon we take more than inflation we are doing a disservice to the people of Christchurch,” he argues.

But dragging the rates rise down to 7% is doable, if the discipline to ease ratepayer pain is forthcoming. The LTP will also serve as a potent marker on Phil Mauger’s middling mayoral record – stymied to date by his failure to secure a working majority of like-minded councillors in 2022. Pivotal decisions on the final budget will be determined by the two “floating” councillors, Andrei Moore and Tim Scandrett, who can swing council votes either way.

The size of your rates bill rests in their hands. Do they want to be rewarded or punished by voters next year?

Mike Yardley is a Christchurch-based writer and commentator on current affairs, and a regular opinion contributor.

IAIN MCGREGOR/THE PRESS Christchurch City Council finance chair Sam MacDonald wants a hiring freeze at the council, and has warned against the city taking on more of the cost of cycleways as it wrestles with its budgets.