Submission to Auckland Council Annual Budget 2016/2017

Our submission asked Council to retain the Interim Transport Levy, as it currently is - $114 for residential properties and $183 for commercial properties for each of the remaining two years.

Heart of the City Submission to Auckland Council

Annual Budget 2016/2017

Thank you for the opportunity to make a submission on the Annual Budget 2016/17.

Heart of the City

Heart of the City is the city centre’s business association. We represent more than 6,000 businesses and 1,200 property owners in the city centre and have an overall mission to champion a successful city centre economy.

Submission

The focus for our submission is on the proposed changes to the Interim Transport Levy. We are asking Council to retain the Levy as it currently is - $114 for residential properties and $183 for commercial properties for each of the remaining two years.

Background

The introduction of the Interim Transport Levy (ITL) for both residential and commercial ratepayers was a pragmatic short term solution to raise additional funds for improved transport infrastructure, which we all want and need. Whilst it was imposed on ratepayers with little notice, we recognise it’s a bridge before the city agrees a longer term solution to transport funding. The amounts were set for three years.

In preparing this submission we have considered the rationale for the proposed change to the ITL, whether it’s a fair and equitable change, and the potential impact on businesses.

Rationale for Proposed Change

Heart of the City has significant concerns about the proposed change to the ITL, which looks to unfairly shift the cost to business one year into a three-year programme in order to reduce the impact on residential rate payers.

We question whether the identified savings of $24 a year for residents outweighs the significant impact this policy change would have on business. Furthermore, additional costs for commercially rated property will likely be passed on to businesses and in turn consumers, the residents of Auckland.

Impact on Business

We do not believe that Council has fully considered the potential impact that the policy change could have on businesses across the city.

If Council was to proceed with the option of increasing the flat rate to $407 per annum, businesses would be paying 122% more than the current fixed charge of $183 per annum. That is a significant increase to an annual rates bill – particularly for small businesses.

If Council was to proceed with the option of increasing the amount collected from businesses and basing their share on capital value, we would see dramatic impacts. Nearly 50% of businesses would pay more than the current $183 flat rate, with some paying tens of thousands of dollars per year.

What is proposed is simply not fair on business.

The justification to charge business more for transport is based on the presumption that businesses tend to generate more vehicle trips on the transport network. We don’t agree that this is a valid assumption. Goods, services and people are all putting pressure on the Auckland transport network.

The proposed change also goes against the move to reduce the cost of rates for business. Historically, businesses have been funding a disproportionate level of rates in the city because of the Rates Differential. In the City Centre, businesses also pay a City Centre Targeted rate, generating an annual $20 million contribution to the transformation of the city centre, which benefits the region and wider economy. Council has recognised the importance of business by slowly reducing the business differential, in its own words to “help to promote business and grow employment throughout Auckland”.

Conclusion

Council is not looking to change the overall revenue from this Levy and we do not see the rationale for shifting the goalposts by placing the ‘burden’ on business to deliver a modest, short-term saving for the residential ratepayer.

Asking businesses to pay more than their fair share one year into a three year rating programme is not a fair and equitable change. We believe this sort of action is not good for business and it’s not good for the economic success of Auckland.

Recommendation

We ask Council to retain the Interim Transport Levy as it is for the remaining two years.

Viv Beck

Chief Executive

Heart of the City

viv@hotcity.co.nz