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Submission to Auckland Council Annual Budget 2020/2021

Submission
Monday 30 Mar 2020

26 March 2020

Auckland Council Governing Body
Auckland Council
Private Bag 92300
Auckland 1142

akhaveyoursay@aucklandcouncil.govt.nz

 

Submission to Auckland Council Annual Budget 2020/2021

Heart of the City is the business association for the city centre, which includes more than 4000 commercially rated properties and 12,000+ businesses. We are committed to the growth and success of the city centre as a vibrant, accessible, safe and welcoming urban community.

 

Introduction

Heart of the City’s submission covers topics included in the draft Annual Budget as well as other matters that we consider relevant for further consideration by Council. This includes the need to factor in the major impact that COVID-19 will have on business in Auckland.  We are cognisant that Council’s priorities for 2020/2021 will be very different in light of the COVID-19 situation.

 

Our feedback covers:

(1) Annual Budget 2020/2021 Rating Proposals
(2) Concerns regarding the impact of the Coronavirus (COVID-19)
(3) Regional Fuel Tax, the New Zealand Upgrade Programme and Climate Change
(4)  Access for Everyone
(5)  Development response

 

(1) Annual Budget 2020/2021 Rating Proposals

Our overall feedback is that what businesses need most from Council is a fair, transparent and stable approach to rates.

Business differential

While we appreciate that the business differential is being reduced and look to that being further reduced in the Long Term Plan 2021/31, fundamentally, we do not accept the view that a business differential should be applied to rates, especially for reasons that “businesses are better able to manage additional costs than residential properties” or because “businesses can claim back GST and expense rates against tax.”[2] These reasons do not justify the business differential, particularly for small businesses who make up most businesses in Auckland. The Shand Report on Funding Local Government recommended against rating differentials. In 2020/2021 the business differential ratios will be set so that 31.68 per cent of general rates (UAGC and value-based general rate) come from business. By comparison, Tauranga City Council has no business rates differential at all.

 

Waste Management Targeted Rate

Our overall feedback is that while we accept the need to pay for increases in the costs of responsibly dealing with kerbside recycling (paper, cardboard and plastics) due to international market conditions, and that increasing the targeted rate is the most appropriate way of achieving this, we question whether rates are fair to businesses when the activities funded by this waste management targeted rate (particularly the increases) largely benefit residential users. In addition, we hold concerns that many small businesses are being encouraged to take individual responsibility, especially for food waste, which places additional financial burdens on small businesses.

 

(2) The impact of the Coronavirus (COVID-19)

COVID-19 is having a severe impact on business.

Although preparations for the Annual Budget 2020/2021 preceded the outbreak of the Coronavirus, we expect that there will be a significant review of Council’s 2020/2021 priorities to support and enable Auckland to recover from the significant disruption and financial impact that COVID-19 is causing.

Whilst Government has put in a place a range of measures to support businesses and individuals (and we expect further announcements in the May Budget) we ask Council to consider measures to assist businesses through this time and as they open and start to rebuild.  Options to consider include deferring rates increases, interim rates relief, accelerating the reduction in the business differential and reviewing the targeted rate for accommodation providers.

 

(3) Regional Fuel Tax, the New Zealand Upgrade Programme and Climate Change

Regional Fuel Tax

Our preference is to introduce initiatives that both manage demand and raise funding equitably as soon as possible, balanced with investment into affordable and more frequent public transport in order to effect sustainable behavioural change. We understand, for example, that technical work on the ‘Congestion Question’ project that has been examining the potential to apply congestion charging in Auckland is progressing. We understand that Council anticipates that the technical investigatory phase of this project will be completed in the first half of 2020 and subsequently be reported to Government and Auckland Council for decisions on any further work. We ask for early engagement in this work please to ensure city centre needs are taken into account. 

While we have supported a regional fuel tax of 10 cents per litre (plus GST) as an interim measure, we ask for greater transparency regarding the spending of this tax on specific transport projects and services. We wish to avoid the regional fuel tax, which is the equivalent of a significant rates increase (especially for transport operators), being used as a ‘top up’ for overall transport budgets.

We are also concerned about the underspend of the Regional Fuel Tax by $268m in its first year. Although we appreciate that the spend of funds raised by the Regional Fuel Tax is planned over the ten-year term of the RFT and that in some years the spend will be less than the revenue (with the balance being held in a specific reserve to be released for projects scheduled later in the decade), we are concerned that businesses are being over-taxed if the RFT is being underspent or that infrastructure is not being built at the required pace. 

New Zealand Upgrade Programme

The Government has allocated $6.8 billion into transport ($5.3 billion on roads and $1.1 billion on rail) with Auckland receiving $3.48 billion of the transport funding.

We understand that Auckland Council is working with central government to establish the impact of the New Zealand Upgrade Programme investment on Council’s budgets. We undertand that decisions on both revenue settings and/or additional investment will be made through the 10-year Budget 2021-2031 process. We ask that this be managed transparently with a view to making fair and equitable decisions regarding how this infrastructure package impacts on the levels of the regional fuel tax and rates funding for transport provided for in the LTP 2021-2031.

Climate Change   

We note Council’s emphasis in the Annual Budget on climate change with actions like electrification of the vehicle fleet, moving to sustainable energy at council facilities and tree planting specified.

Heart of the City is supportive of this being a priority, in particular investment supporting mode shift in transport, electrification of the bus fleet and sustainable waste initiatives.

As a majority of businesses in the city centre are small to medium sized, we welcome initiatives that support business to make the necessary changes. Education is important to raise awareness and drive change.  

 

(4) Access for Everyone

Heart of the City is supportive of the Access for Everyone (A4E) concept, a key part of the refreshed City Centre Masterplan endorsed by the Planning Committee in March 2020.  In 2020/2021 trials are expected to be undertaken to test the concept, and this includes the delivery of a Queen Street pilot trial by March 2021. Council must ensure that there is adequate funding and resource to support these trials, with business engagement factored into plans.

 

(5) Development Response

Heart of the City has been advocating for a number of years on the importance of ensuring ‘Development Response’ programmes are funded and in place for all major capital works projects being undertaken by the Auckland Council family. The significant impact these major projects can have on businesses has been well publicised – and in particular the City Rail Link. The impact of construction projects over the next few years will compound the major impact that COVID-19 will have on business. We urge Auckland Council to ensure through the budget process that all major projects have dedicated budget to ensure that these impacts are mitigated.
 

Conclusion

As we enter a very uncertain period for businesses, we ask Council to carefully consider options for Council to consider relief and support for these businesses in the Annual Budget 2020/2021.    

 

Yours sincerely,

Viv Beck

Chief Executive, Heart of the City

 

[1] With regard to the amendments to the Rates Remission and Postponement Policy and Revenue and Financing Policy, please treat our feedback below as also being feedback on the amendments to those Policies.

[2] As set out in the Additional supporting information to the Long Term Plan 2018/2028. For example, if income for a small business is relatively flat, but there is a significant rates increase, the extra rates expense will impact negatively on the profitability of the business and may even force the business to run at a loss.

[3] Your Consultation Document says that the cost of responsibly dealing with our kerbside recycling (paper, cardboard and plastics) has increased due to international market conditions. To pay for this you are proposing to charge only those who use the service by increasing the targeted rate by $19.97 a year or $0.38 a week (the total cost changing from $121.06 to $141.03 incl. GST). You say that if Council does not do this, you will have to fund the shortfall by increasing general rates for all ratepayers, including those who don’t get a kerbside collection service.