Auckland city rates need reform - youngest mayoral hopeful
Auckland's youngest candidate for Mayor is calling for reform of the city's rates as a tool to ease the housing crisis.
Mayoral hopeful Chlöe Swarbrick, 22, says rates contribute to the cost of housing by adding extra costs for those who build, while rewarding land-bankers who leave properties untouched.
Auckland's rates are based on capital valuations - made up of the estimated value of the land and the "improvement value" of buildings on site. When land is developed, the improvement value rises, leading to an increase in overall rates.
Ms Swarbrick says the system is a tax on building and sends the wrong message to land-bankers and speculators.
"Taxing improvement disincentivises development and can incentivise land banking and speculation," she says.
Ms Swarbrick wants to remove improvement values and base rates valuations on land alone. She says that would ease the burden on those who choose to build and deliver more housing at lower costs.
Property Institute CEO Ashley Church says rates adjustments could be used to reward Aucklanders for building on land, but Ms Swarbrick's idea doesn't go far enough.
"If you were going to use rates as a tool you'd have to something much more dramatic, like rating bare land at a much higher rate than improved land," he says.
"I don't think this proposal would be strong enough on its own."
Rates have become a core election issue after several years of rises under Mayor Len Brown.
This year the average rates rose 2.5 percent, but last year peaked at 9.9 percent, and Mr Brown's would-be successors have all been keen to rule out that kind of increase on their watch.
On Monday candidate Phil Goff pledged to limit rate rises to 2.5 percent, while his right-wing rivals Vic Crone, Mark Thomas and John Palino have each pledged increases of no more than 2 percent.
Mr Goff is looking to raise funds elsewhere, relying in part on central Government.
"We need an additional $17-20 billion for core infrastructure to support future urban land areas," Mr Goff says.
"It is inappropriate and unfair to fund that solely through the blunt tool of raising rates. We need to find alternative innovative funding sources such as sharing more Government revenue with council, public-private partnerships or raising infrastructure bonds."
But former Xero managing director Ms Crone doubts Mr Goff can work with politicians in Wellington.
"Mr Goff has finally released an agenda that shows he's out of ideas, out of depth and out of touch. It also relies heavily on Government intervention so it's not even policy he can deliver."
Orakei local board member Mr Thomas agrees.
"The Labour MP wants a regional petrol tax, infrastructure bonds, a congestion charge and a bigger Auckland share in the Government's infrastructure fund. He controls none of these."
But Mr Goff's fiscal policy was welcomed today by the Auckland Ratepayers' Alliance - even though it exceeds the 2 percent cap the lobby group is asking candidates to adopt.
"While 2.5 percent isn't the 2 percent we're promoting as part of our Ratepayers' Protection Pledge, Phil Goff deserves credit for acknowledging that the next Mayor is going to have to focus at delivering better value for money for ratepayers," says spokesperson Jo Holmes.
"Mr Goff has responded to the Ratepayers' Alliance campaign calling for a better deal and has provided more specifics than any previous candidate standing on a centre-left ticket. Ratepayers will welcome that."