Myth Busters #1

It thought it would be useful to do a bit of a ‘mythbusters’ column. I keep hearing a regular list of issues with Auckland Council, some of these are actually issues with our previous local council in its various forms over the last 50 years, some are more recent.

One of the most common ones I come across is “we’re not getting our fair share of rates”. Always a problematic one as does this mean what I pay being spent right outside my front door? The township? or district? Some residents of Wellsford define things as anything north of dome valley for example, I tend to look at things in terms of Rodney Local Board area that I have been elected to represent.

So are we getting back into Rodney what we pay to Auckland Council in rates? It would appear so, in fact we are ahead, clocking up an additional $20 million of investment in Rodney this year above the rates contribution (just don’t tell the rest of Auckland that!!!).

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“It’s a national disgrace,” said Graeme Carter, of Silverdale specialty timber company Herman Pacific. 
District council rates on his industrial property for 2008-09 have risen from $26,600 last year to $61,900 – a 132.05 per cent rise compared with 13.2 per cent last year.  NZ Herald 10th August 2008

This is really not too surprising. No one should forget the double figure rates increases under Rodney District Council which struggled with a tiny population that was rated to finance a huge areas infrastructure. Watercare alone is now pouring hundreds of millions into failing infrastructure across Rodney and the new Auckland Transport budget is signalling a spend of over $700 million in Rodney over the next decade including an unprecedented $121 million in road sealing. Between AT and NZTA over $70 million is being spent over the next three years just of the section of SH16 from Brigham Creek to Waimauku. So are we getting back what we pay in rates in Rodney? It would appear so.

Another chestnut is the “Council has an unsustainable debt level”…

Rodney District Council struggled with its finances evidenced by bringing one of the highest level of debt of any legacy council into Auckland Council on amalgamation it may well be that this legacy is why this comes up.

Auckland Council has actually been a prudent borrower, don’t take my word for it, Standard and Poors give Auckland Council a AA rating and Moody’s a Aa2 rating. Borrowing to fund capital investment in infrastructure, which is what Council does, is a perfectly logical way of financing it’s capital spending, the government does it, and in fact so do other councils and governments across the world. The idea that council has unsustainable debt levels isn’t born out by the facts, objectively looking at other similar sized corporations or government entities it’s quite normal. Council generally doesn’t splash it’s capital spend around on pointless stuff*, since I’ve been on Council I’ve seen the lid come down on capital spending and more of a focus on core business. Operational spending is slightly different and there will always be areas where this could be done better or the value is debatable, council needs to constantly be vigilant to ensure it delivers value for it’s ratepayers.

And finally, “Council is wasting billions on a tram system to the Airport and North West”. Council is not spending money on light rail. Both proposed light rail projects in Auckland are Central Government ones and funded primarily by NZTA a government agency. In the case of the proposed North West light rail project government has pledged $2b but needs the rest of the money to come from private investors. Again, don’t take my word for it, a quick google will show this is an NZTA/Government, not Council, project.

*update… although maybe I should have excluded things like the America’s Cup which while it has some downstream infrastructure benefits, doesn’t seem like a burning priority for the city, and there are other examples…

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Local Board Update – June 2018

This month I’m going to borrow from an excellent column our Local Board Chair, Beth Houlbrooke has written.

By the time you read this the Board will have made a decision which way it has headed on the ‘Rodney Local Board’s Transport Targeted Rate’ proposal. The proposal was a local targeted rate that would only be spent in Rodney on bringing forward investment in a range of projects across the Local Board area.

Whatever the outcome, this has not been an easy process for us politically. Given some of the comments directed at us online one would think that we have raised this possibility simply to make ourselves unpopular, but what could our motivation be?

We consistently hear that transport is a priority for Rodney, that the local board is “toothless”, lacks influence, and that our residents want more local decisions made locally.

You may recall where this all started. We have all been paying $114 on our rates bill as an Interim Transport Levy for the past three years.  Many people believe that we have not seen any benefit from this rate, and that the money has all gone towards central city projects. So, the local board asked: how can we ring fence the levy so that it is only spent in Rodney? The answer to that question was that the only mechanism that would achieve the objective of having 100 percent of the money collected in Rodney, spent in Rodney, was via a targeted rate.

Whatever is decided, it has been a very useful exercise for a number of reasons. It’s highlighted the constraints the local board has to work within – a very small footpath budget, and only advocacy on road sealing and parking. It’s revealed that there are options open to us if the public want us to use them. And it has given some very useful feedback that we can take to the Governing Body of Auckland Council, to demonstrate the frustrations of our residents.

We have had one of two choices: not to implement a targeted rate and continue to work with inadequate budget to address the lack of better public transport, a long list of footpath requests, and a continuation of the current rate of road sealing; or: implement the targeted rate and finally start to see things happening.  In other words, we have the ability to do something about this, make some progress, or still be talking about it next year, and the year after, and again in three years at the next long-term planning cycle.

The decision may be unpopular either way, but do you want your elected representatives to be more concerned about their re-election, or to be courageous and seek the change they came into this job to make?  In the words of another more famous (or infamous) politician: We do these things not because they are easy, but because they are hard.

Be Prepared

It was a difficult few weeks last month for many residents following the storm that swept through the area destroying houses and cutting of power to thousands of properties.

The spontaneous response of residents with people helping each other and the generosity shown by so many looking out for neighbours and total strangers shows what a great community we live in.

As things slowly get back to normal it seems like a good time to emphasise some of the messages Civil Defence puts out about resilience and being prepared for natural disasters.

Everyone’s first stop should be the ‘Get Ready Get Thru’ website (getthru.govt.nz). Head straight to the ‘How to Get Ready’ page and go through the steps to get your family prepared. Civil Defence has long talked about the need for people to be prepared to look after themselves “for at least three days”.

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There is good reason for this. The only government funded organisations I have seen that know how to respond quickly to emergencies are the obvious ones of Fire, Police and St John. This is what they do on a daily basis and crew are trained to react quickly and be prepared for the emergencies they respond to.

Councils and large corporations on the other hand are not quick to react to Natural Disasters. Having been involved in a few of these situations personally through the Fire Service it is obvious that large organisations take about three or four days to crank up capacity to deal with unfolding disasters. Communications and management systems have to be rolled out, staff who are not used to dealing with emergencies on a daily basis have to fall into roles they are unaccustomed too, when the machine finally cranks up to speed it does, mostly, work. However up to that point we’re on our own when it comes to dealing with the situations we find ourselves in.

I’ve seen some comments that the situation was ‘third world’, implying that in the ‘first world’ these sorts of situations are dealt with quicker or better. A cursory glance at recent events in first world countries show that while the response is obviously far better than the real third world, it isn’t a premium quality instant reaction and there are always lots of issues – in short, it isn’t a Hollywood movie response.

We should prepare for the worst and these events should be a reminder that natural disasters are unpredictable and difficult to deal with quickly because the scale rapidly overwhelms local resources. Starting with home based resilience should be something you and your family prioritise. Civil Defence have some simple things you can do that will make disasters easier to cope with if you have a planned for the unexpected.

Another local network people may want to consider joining is Rodney Neighbourhood Support, (formally Neighbourhood Watch) this is a great network for both general security and also a mechanism for dealing with the sorts of events we have all just been through. You can join up and find out more by visiting nsrodney.org.nz  A street by street network of Neighbourhood Support groups would be a great local resource for emergency services to tap into.

There will no doubt be some soul searching with a range of organisations about what can be done better. I will be pushing for the reinstatement of local Civil Defence reporting centres and better communications that can cope with an absence of mobile phone networks. The Local Board will also look at how it can ensure targeted local halls can be fitted out to provide emergency facilities for locals to access.

Are Auckland Council’s staff costs really 50% of rates revenue?

So first off this isn’t a defence of Council’s financial management, it’s looking at the facts and how they are presented.

There’s a claim that “employee costs are 50% of annual rates revenue”, is this really true?

It makes a great social media post. OMG! really? half of the money Council takes is spent on staff???

No one is going to bother to go and have a look at Council’s accounts, they’re simply scrolling through their Facebook feed and see Council is spending 50% of its income on staff. Outrageous! Lots of Angry Face Emoji!!!

It is true. In 2017 Council had a rates revenue of $1,641,000,000 ($1.64b), and yes, it spent $853,000,000 ($853m) on “Employee Benefits”. That’s actually 51.98% of rate revenue, not 50%.

But, and there’s always a but with neat statements packaged for social media…

Auckland Council’s total revenue for 2017 was $4,129,000,000 ($4.13b).  This included all sources of income such as fee’s and user charges which are obviously quite legitimate sources of income as they help cover the costs of staff providing the services.

The staff costs compared to revenue figures looks quite different when compared to total revenue, it’s actually 20.66%.

You can’t really exclude half your income when working out what your costs are, which is how you might arrive at 50% staff costs. The implication is that Council is chucking half its revenue into salaries. That is, of course, not the correct picture at all. I think if you tried that on with IRD they might not entirely agree with your workings.

Auckland Council’s Annual Report for 2016/2017 (skip to page 11)

Auckland Council’s Annual Report for 2015/2016 (skip the warm fuzzy photo’s and colourful pie graphs to page 63)


 

While we’re on the thrilling subject of Council finances how about the old chestnut about the claimed efficiencies of Auckland Council and whether it was going to reduce staff costs and numbers, which is, I suppose the subtext to the narrative about Council spending.

How has Auckland Council done?

Using total revenue to staff costs, in 2016 Council spent 21.67% of total revenue on on staff, and in 2017 it spent 20.66% of total revenue on staff. That’s a drop of 4.53% between 2016 and 2017.

During that time the population of Auckland grew by 2.6% and one could argue (as Council does) that as Council is in the business of providing services to people, you’d expect staff costs to be either the same or growing. It will be interesting to see what happens this year and whether it can keep cutting staff costs and whether technology will help (or whether millions will disappear into an IT black hole with little in the way of productivity gains)

An interesting comparison is how Auckland Council stacks up to legacy Council’s, so I’ve had a quick look at the same figures for both Rodney District Council and Auckland City Council. Using the pre amalgamation accounts of 2010 Rodney spent 18.38% of total revenue on staff, and Auckland City Council spent 19.80% of total revenue on staff.

So much for the promised savings. Auckland’s population has grown sharply since 2014, so Council’s could defend those figures by pointing to the staff needed to deal with growth.

Despite the hyperbole the current staff spending to revenue ratios are not wildly different between Auckland Council and previous councils. That possibly begs the question, was there any point in amalgamation? (especially if you’re a local government trainspotter obsessed with Council’s activities) That’s a whole different debate that will no doubt rage for years to come.

Auckland-Population-Change-2016
image credit: Transportblog (now called Greater Auckland)

Will Government Override the Unitary Plan? (again)

Local Board Update April 2018

As any long suffering resident of the North West knows, the results of green field housing development without infrastructure are plain to see.

Back in 2013 the Government felt it had to do something about the ‘Housing Crisis’ filling up the front pages of the newspapers.
Its solution was to override Council’s pesky planning rules that were apparently stopping houses being built and force development on areas such as Huapai. Don’t worry, we were told, we will make sure all the infrastructure is fast tracked. History speaks for itself, despite the thousands of homes promised across Auckland, a fraction have been built, and where they have, like Huapai, much of promised infrastructure has yet to appear. Meanwhile the housing market remained virtually unchanged.

Fast forward to 2018 and we have a new Government with new plans to solve the crisis. Unsurprisingly it seems that once again, it’s all about that pesky Council and it’s planning rules. The solution appears to be more housing in green fields. To do this Government will apparently biff the Auckland Unitary Plan out the window and remove the ‘Rural Urban Boundary’ (RUB), a notional boundary council has put in place based on it’s ability to provide the infrastructure needed for new housing. But don’t worry, Government will make sure infrastructure is provided… sound familiar?

Currently green field development is cheaper, for developers, the problem is these don’t bear the full cost of infrastructure (as we’ve seen with the traffic in Kumeu) and because ratepayers are effectively subsidising development in green fields it has skewed the incentives towards this activity. Brown field developments where the infrastructure is in place have higher land costs because the investment in infrastructure is built in to the value of the property. The difference between the two types of development are the mess we see in the area around Kumeu.

RUB

Council has estimated the real cost of green field infrastructure per dwelling is $140,000. Development Contributions pay for a small fraction of this cost, you and I are subsidising the rest through rates and living with the external effects. It’s great for land-bankers, developers and purchasers, convenient for a Government wanting a quick fix, but hopeless if you have to deal with the traffic each day.

There is currently enough land available in both green and brown field areas to build the houses Government says are required. The question is, why aren’t these being built? I would hazard a guess that if all those houses suddenly came onto the market at once developers would go bust, there’s no incentive for landowners or developers to bring the market price down. Blaming Council for the issues is a great diversion from the complicated market forces at work.

I can imagine land bankers will be agitating the Housing Minister and MP’s to have the RUB removed, they won’t be losing any sleep over the traffic mess, lack of schools, or the unfair cross subsidisation we have to pay for their developments.

The Housing Minister shouldn’t be seduced by the simplicity of the idea that removing the RUB will magically unlock more land for housing, bring prices down, and solve the ‘housing crisis’.

Council put the RUB is place to ensure it could roll out all the services needed for new development. It didn’t come up with this idea overnight, it took years of planning to work out what was going to be needed and where. The Special Housing Area fiasco has starkly shown what happens when this process is ignored.
We have a plan in place for Auckland. If Government wants to work within that to encourage housing in the land currently zoned for development there are plenty of ways it can do this – Hobsonville being a great example. It doesn’t need to foist poorly executed quick fixes with vague promises of infrastructure on rural areas and then turn a blind eye to the resulting chaos.

Let’s hope we aren’t about to see history repeating itself, because if the RUB is going to go, your commute to work is about to get even worse!

You can read the Council report on this by visiting this link… https://www.aucklandcouncil.govt.nz/about-auckland-council/business-in-auckland/docsoccasionalpapers/the-brownfield-bounce-march-2018.pdf

RLBTTR (Roll Better, or the Rodney Local Board Transport Targeted Rate)

Local Board Update – February 2018

During last year’s Local Board plan consultation, we floated the idea of a local targeted rate for transport projects that residents told us were important, 52% of submitters supported doing more work on a proposal and now we have something for people to consider.

The Rodney Local Board Targeted Transport Rate (or RLBTTR for those who like clever acronyms) would see an annual targeted rate of $150 per rateable property ($2.90 per week) that would bring forward investment in transport infrastructure over the next 10 years. In the Kumeu Subdivision of the Rodney Ward (Kaukapakapa to Taupaki) the $21 million program would include; a new bus service from Riverhead to Westgate and additional buses from Huapai to Westgate starting in 2019; a Huapai Park’n’Ride; additional road sealing and footpaths.

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Here are some of the concerns I have heard and responses to those;

“We already pay rates, why aren’t these things covered by my rates already?”. 
The targeted rate is about bringing forward investment. Many of these things will happen eventually; Auckland Transport is proposing a bus service in Riverhead from 2021 and there is a road sealing and footpath program but it is not keeping pace with demand. Auckland Transport has a $7 billion shortfall in its 30-year budget (Regional Land Transport Plan – RLTP) for current priorities, however even with the proposed fuel tax there is still not enough money. Accelerating investment will see projects related to our proposals brought forward in future years. This will help us keep up with growth.

“Rodney already pays its fair share in rates and we don’t get all our rates spent in Rodney”;
This is a common sentiment, everyone in Auckland thinks their rates are spent everywhere but their districts – obviously that can’t be true. We live in a large Ward with a lot of infrastructure like roads supporting a very small population, despite being 48% of Auckland’s land mass we service assets for only 64,000 people, that’s half the number of people in the Waitemata Ward which is one of Auckland smallest Wards in size. Because Rodney is growing, hundreds of millions of dollars of investment in infrastructure are pouring into Rodney. I have been involved in work to see if our Local Board portion of rates could be separately stated on our rates notices in Rodney, what that work demonstrated was the level of cross subsidisation from the rest of Auckland into Rodney, it showed me that we actually get more back than we contribute.
“How will I know the money will be spent in Rodney”;
The Local Government Act 2002 requires that Targeted Rates must be spent in the area they are collected for the purpose they were collected for. We had to prepare a detailed proposal (35 pages) of what the Local Board would do with this rate. By Law this money must be spent in Rodney on transport projects otherwise it has to be returned to ratepayers.

“I thought you were going to do a train service as part of this targeted rate, what happened?”;
Originally, we wanted to do this, however the 10 year cost for a train service from Huapai is estimated to be around $73 million. The benefits of the rate must be spread across Rodney, spending all the money on a train service would be unacceptable. As part of the Governments RLTP review some form of rapid transit is being considered on SH16 and this will show whether rail is part of a wider strategy for our area. We decided a Park’n’ride would be a better short-term investment because it would fit in with any rapid transit system Government and Council develop.

“I don’t use the bus because of where I live, why would I support this?”;

A valid point, however as our population grows so will the traffic, everything we do to get people onto public transport removes cars and congestion from the roads, this has a wider benefit for everyone e.g. businesses who have to move goods around. Building more roads simply means there will be more people moving in to use them, developing public transport now is the long-term solution to getting people around in a city like Auckland.

 

“The bus takes just a long or longer than driving, why wouldn’t I just use my car?”;

As the entire North West grows traffic congestion will get worse. While housing development in Huapai and Riverhead will level off up to 2028 in Redhills, Whenuapai and Hobsonville there are over 10,000 properties being developed now, this plus the improvement to SH18 to channel traffic from SH1 onto SH16 and the tunnel will increase traffic on SH16 from Westgate. The development of bus lanes on SH16 will speed up the bus service while the congestion builds, it is inevitable that over the next 10 years public transport will become quicker than driving the car into the CBD.

There are pros and cons for the proposed targeted rate and I can see both sides of the argument. I understand the difficulty faced by people on fixed incomes when hit with rates increases and as I have commented previously, no one likes paying more tax. The Local Board has worked to find a solution to the growth we face in our towns and the calls for more investment in transport infrastructure. We can wait in line with every other part of Auckland, all of which faces the same pressures, or we can pay a bit more now to bring forward the investment to deal with Rodney’s transport woes.

Public consultation runs from the 28th February to 28th March, you will be able to do this online at ‘akhaveyoursay.nz’ paper feedback forms will be a local libraries and service centres, by emailing akhaveyoursay@aucklandcouncil.govt.nz or on Facebook at #akhaveyoursay.

10 Year Plan, Planned out yet?

Local Board Update January 2018

It’s 2018 and Council is kicking things off with consultation on its ’10 Year Budget’ formally the ‘Long Term Plan’.

The Mayor has published his vision for the 10 Year Budget and as an executive Mayor, rather than the type of Mayor’s we had under Rodney District Council, he leads this process.  You can find out where he’s headed by googling ‘Mayors Vision For Auckland’.

I can imagine a few rolled eyes at this point and the usual justifiable cynicism about the whole process, “why bother” you’ll be asking yourself, “no one will listen and they’ve made their minds up already”…

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The 10 Year Budget sets out the spending goals for your Council. This budget will determine the level of rates council sets over the coming years, the services council provides, how it spends your rates and money it borrows for capital spending, the major projects it undertakes whether for community facilities or transport infrastructure, how it’s going to manage its finances and ensure the ‘books are balanced’ and what will be cut to ensure that.

Given we’ve got a lot of residential growth in our district and all the associated infrastructure pain that comes with this, it’s very important we engage with this process and provide feedback for or against the proposals.

The Local Board has a number of important things we want feedback on.

We have a planned a multipurpose indoor sports facility for Huapai to meet demand for courts sports and out of season use by the growing sports clubs in the area.  Getting widespread public support for this $12million project will be essential if it’s to go ahead.

We are also planning to undertake main street upgrades in Helensville and want to ensure this is widely support before we allocate funding to this work.

We have heard from you about the transport issues we face and there was tentative support for a proposed targeted rate to bring forward transport spending.  We have spent over six months working with Council’s finance team and Auckland Transport on a range of projects that could be financed by a $150 targeted rate per property.  It includes additional road sealing for local roads like Wilson Road in South Head, and footpaths in Helensville and Kaukapakapa. More buses from Kumeu, a new bus service from Riverhead and a Park’n’Ride in Kumeu.
Unfortunately, our proposals for a targeted rate are against the background of other targeted rates across Auckland for improving water quality and environmental issues.

 

Residents will have to weigh up the benefits of these targeted rates proposals and decide whether they offer value for money.  Targeted rates have one positive attribute in that they must, by law, be spent on the purpose they are levied for.  This means we can have confidence the money will go where it’s meant to be going, however you may feel the benefits for you are limited.  There are arguments for and against, however the Local Board received feedback that residents wanted the option and so we have presented a viable package for your consideration. It is now going to up to your feedback whether we proceed with this.

It is essential we get as many people as possible providing feedback either for or against the plan as the community’s future will be guided by these budgets.

This year a detailed document will not be sent out to addresses as in previous year with the push being to get people to go online to provide feedback, or visit their local library for a feedback form.
Consultation starts in late February & March and keep an eye out here or on Facebook for information or google ‘Auckland 10 Year Budget’ for more information