19 Apr 2020

Councils wrestle with rates hike decisions as Covid-19 costs emerge

10:32 am on 19 April 2020

The Napier City Council says property owners would be looking at a 14 percent rates increase, if they were to absorb the true costs incurred by the Covid-19 crisis.

28072016 Photo: Rebekah Parsons-King. Napier City Council.

Photo: RNZ / Rebekah Parsons-King

Mayor Kirsten Wise was one of several new mayors faced with a global pandemic within six months of being elected.

She said the council was now figuring out how it might absorb the additional costs, while sticking to what was set out in its annual plan.

"We were originally looking at a 6.5 per cent rate increase. A lot of that relates to contractual obligations we already had, and we're looking at ways we can offset that."

Unlike some other councils, which have already said they were not increasing rates for the coming year, Napier was not in the same boat.

"There's absolutely no way that here in Napier that we could do a zero rates increase and we've been quite open with our community about that," Wise said.

She said the council was still working through what the final figure would look like, but infrastructure including that needed to improve drinking water supply remained a priority.

Wise said Napier, which was reliant on tourism and hospitality, would likely be worse affected that other Hawke's Bay councils.

"We've done some local analysis around unemployment and Napier is forecast to be above the national figures."

Storms, wash-outs, roads and bridges gone and now a pandemic were now prompting West Coast councils to claw back rising levels of disaster-related debt.

The mayor of Grey District, Tania Gibson, who was also elected last year, agreed with Kirsten Wise that the current climate was not something she could ever have imagined, but she had no regrets about putting her hand up for the role.

"It certainly wasn't the entrance to the role I thought it was going to be.

"There have been some very, very tough days and some sleepless nights."

Gibson said the support of a knowledgeable and experienced team of staff and elected members had helped.

"I've just had to knuckle down and get on with the job."

She said the Grey District was no different to other councils looking at which projects to axe, to avoid ballooning debt.

"Everybody has projects on the table and things they were going to be doing, and we're all scrambling at the moment to make sure we can do the best for our ratepayers.

"All unnecessary projects will be off the table, but we still have to make sure we do projects that keep employment going, and we can't let our infrastructure keep falling behind."

Gibson said councils were facing a future where only core services could be afforded. She said it was critical that councils did not make decisions now that might overly burden future budgets.

"If we keep borrowing it's going to affect people down the track for the next three to five years and beyond.

"We have to make smart decisions now because things still need to be paid for, but the whole country... everybody's borrowing at the moment and it's not sustainable.

"We need to make some smart decisions."

The West Coast already struggled with only 16 per cent of its district in rateable land.

Gibson said public expectation of what councils could do had to be reined in.

"Meeting with mayors from around the country, there will have to be some tough decisions.

"Politically people have tried to make the popular decisions for too long, and we've seen a lot of our infrastructure in our country and in our districts fall behind.

"If we don't pull our heads out of the sand and do something to rectify this then we may lose those systems to the government, so we are going to have to make some unpopular decisions."

  • If you have symptoms of the coronavirus, call the NZ Covid-19 Healthline on 0800 358 5453 (+64 9 358 5453 for international SIMs) or call your GP - don't show up at a medical centre
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