Auckland Council's Draft Annual Budget Plan 2017/18
The Auckland Council is currently consulting on its 2017/2018 annual budget and Heart of the City is preparing a submission on the plan/budget. Read Council’s consultation document here.
Broadly, our view is that businesses need a fair, transparent and certain approach to rates. We have also encouraged the council to look more broadly for opportunities to make savings.
Key aspects of Heart of the City’s response concern proposals to:
- extend the 20-year timeline to reduce the rates differential between commercial and residential properties
- introduce a special rate for some accommodation providers in order to pay for tourism promotion.
1. Rating Stability
In 2013, Auckland Council decided to reduce the rates differential between businesses and residential properties over 20 years. Currently Auckland businesses pay 2.73 times more rates than other ratepayers. The Council is proposing under the 2017/18 annual budget to apply the same rates increase to everyone and pause the reduction in the business differential for the 2017/18 period.
HOTC does not support this proposal. We consider that the business rates reduction should continue. Further, we do not accept the reasoning given by Council that businesses should pay significantly more rates. The impact of higher rates on small businesses particularly (who make up most businesses in Auckland’s CBD) is significant.
2. Paying for tourism promotion
The Council currently spends around $30 million of general rates each year on tourism promotion and major events. To continue to support Auckland’s rapid tourism growth the Council is proposing to fund tourism promotion costs via a targeted rate on accommodation providers.
HOTC does not support the introduction of the proposed targeted rate. While we acknowledge the challenges to infrastructure resulting from tourism growth, we do not believe a targeted rate on accommodation providers is the right mechanism to address it.
Firstly, asking one sector that earns about 10% of the tourism spend to pay the full cost of tourism promotion is plainly unfair.
Secondly, imposing rates increases on these ratepayers of between 150% and 300% will have a massive impact right across the region. While the impact will vary depending on circumstances, it will be significant and property owners will be given very little notice to manage this change.
Further, we do not consider the Annual Budget round as the appropriate time in the planning cycle to hold a discussion on what is a significant new policy and rating instrument. We see this as an issue that should be considered as part of the Council’s Long Term Plan and we have signaled that we would welcome the opportunity to participate in such discussions on behalf of our business members. We are also noting in our submission that the impact of tourism growth is an issue beyond Auckland and as such is also a matter for central government.