Cr Bill Faulkner Faulkners Corner www.sunlive.co.nz

The new council is continuing with its induction workshops, providing a comprehensive overview of our city's present situation and the options available over the next three years.

It's not news that council has some pretty fine financial juggling to do in order to maintain our present levels of service and keep the city functioning at a cost most can afford. I say ‘most', because it's clear some ratepayers are struggling financially and rates play a part in that. Apart from the rates rebate scheme, the only other practical relief that can be offered (and it is a central government decision), is a community levy or to put it more bluntly: a poll tax to fund the UAC/general rate portion of the rates bill.
The 2007 Shand Report to the then Labour Government said the existing rating system is unsustainable into the future. However, the Labour Government did little to address this report and so did the National Government. Fiddling around with ‘super cities' may solve some problems, but will inevitably create others.
If we are to learn from Tauranga's past, amalgamations don't produce savings. They may redirect costs, but in the 1989 local body amalgamation that united Tauranga, Mount Maunganui and Papamoa, all that really happened was that the Mount/Papamoa rating base was expanded substantially and costs spread over more people. Which is also what a community levy/poll tax will do. But don't hold your breath. It's election year in 2011 and a poll tax initiative is hardly a big vote-catcher for politicians who need to be able to offer tax reductions.
When to BIF?
Council discussions this week centred on growth; the ‘growth pays for growth' philosophy, development contributions and the role development plays in Tauranga.
It is a complicated subject. When a subdivision is completed, the developer pays a Subdivisional Impact Fee (SIF). This is a contribution to city infrastructure costs incurred by the impact of the subdivision on water and wastewater services, etc. When a building is constructed, a Building Impact Fee (BIF) is payable. This is a contribution towards the cost of city amenities like libraries and indoor facilities. Charges vary depending on where you live, because fees are calculated depending on what costs are incurred in a particular area.
As an example, Papamoa has significantly lower impact fees or development contributions than Bethlehem. Other cities combine the SIF and BIF into one fee and this is paid upfront by the developer. Ultimately the property purchaser pays, but of course the developer has to bankroll the payment until the section sells. The holding costs add up rapidly but it means that council gets the full contribution at the beginning and doesn't have to wait until a building goes up. This means fewer holding costs for city debt as our council borrows to fund the cost of infrastructure.
Scheming the plots
In some cities, development is directly subsidised by rates. The rationale is that everyone benefits from growth by expansion of the rating base. That is a valid argument but there are pros and cons that depend on individual circumstances like the topography of a city.
Tauranga is situated on a lengthy peninsula separated by estuaries and a harbour, whereas Hamilton is basically square. Charging per metre of infrastructure costs in Hamilton would allow more ratepayers to share costs than, for instance, on the coastal strip where Papamoa is located.
Development contributions in Tauranga are costly, and in my opinion are unsustainable. In the short term we could defer infrastructure and slow growth, but that would have an effect into the medium/long term. We could put up a ‘Sorry, Full' sign, but that would affect the economy of a city with a strong dependency on the building industry. Or we could revert to the bad old days where ratepayers subsidised development.
Returning to the dark ages
Another option is to lower peoples' expectations and offer lower levels of service for new developments. But how many residents would want to revert to the days of the 1110 square foot Beazley-type house on a quarter acre section with no garage, septic tank or stormwater into the ground? How many would put up with basic water treatment, no kerbing or channelling and single way chip seal roads, which is what people got in the days when housing was ‘affordable.'
Government would need to drastically review the Resource Management Act (RMA) and reintroduce three per cent State Advances loans over 30 years and the Child Benefit Capitalisation Scheme (you used to get paid for having children). Or forget artificial boundaries and allow subdivisions to be built wherever. There won't be many promoting this option.
Using an iron grip
So where is Tauranga headed? Sadly, for a significant portion of our population, home ownership won't happen without central government intervention. There is already an under-supply of rental accommodation in the city.
Much of the situation is beyond local government control and what council can and should do is maintain the present infrastructure and amenities at best value cost, which means not necessarily taking the cheapest option.
Council should also avoid expensive repetition of services into the future by taking measures such as increasing the size of infrastructural pipes, reducing the likelihood of having to replace them too soon.
As I said during the local body elections, this council faces some hard decisions. Decisions to do some things and not to do others have the potential to cause angst in various sectors of our community.
What is beyond dispute is that local government is at the end of its financial tether. Strong action is needed from central government to address what they already know is a serious issue that directly affects New Zealand communities.