Auckland Council is proposing a toilet tax. Its purpose is to raise a billion dollars over the next twenty years to pay for a new sewer line needed now. After decades of underfunding infrastructure while building stadiums and other pet projects, the council can’t afford the essentials.
There are many concerns about the proposed tax, one of which is that people may start peeing in the shower. Another is the lack of fairness. It is not a user-pays approach! One person in a two-toilet house does not produce more “number twos” that two people in a one-toilet house. The mathematics of poop production are ignored.
Developers will respond by building houses with fewer conveniences to avoid some of the tax. It won’t affect the volume of sewage, but bigger households may have to start queuing.
The more important concern is that Auckland Council is so deep in debt that it isn’t allowed to borrow the money. The Local Government Funding Agency sets rules and Auckland Council faces a credit downgrade if it goes over the limit. Instead, the Council is asking the government to pass new legislation creating an unelected ‘independent’ body to raise the tax. This is a dangerous road to take for democracy. It is also alarming that Phil Goff thinks borrowing under a different name will solve the problem.
Like household mortgage limits, the Council’s debt limit is the maximum that ratepayers can realistically be expected to pay service the repayments. Using a different name does not mean ratepayers can suddenly afford it. It is like going to a loanshark when you can’t meet your credit card payment.
Hamilton City Council’s commitments in the newly-minted ten year plan (which is replaced every three years) take us to within $10 million of our debt limit. Any problems with infrastructure, natural disasters, or economic downturn will push us over.
That could mean a credit downgrade and higher interest payments, leading to even higher rates at a time when too many people are already hurting.
It would be nice to believe there is no risk, but council staff led us to believe that the books at the last election were in the black, debt was under control, and the city was looking flush (pun intended). Months later, Andrew King was dropped in the proverbial creek.
We are concerned that Hamilton could be lumped with a toilet tax, or an equivalent such as a rain tax. The reason for the flood letters sent to most homeowners a few years ago was not a risk of the Waikato river overflowing, but council’s aging stormwater drains failing to cope.
In 2008, Hamilton’s debt to revenue ratio was 110%. In 2015, the Local Government Funding Agency set a debt affordability benchmark for Hamilton of 187%. But the ten year plan now increases debt to 230%.
The Hamilton Residents & Ratepayers Association Incorporated invites the Council to explain what contingencies are available in the case of unforeseen problems. How will money be raised? If the Local Government Funding Agency won’t lend, then who will? What happens if the Council gets a credit downgrade? What assets can be sold to raise cash? What services can be cut? Are there any alternatives to more rates hikes?
This is a public discussion we need to have. Ratepayers are already stretched by the current debt. We don’t want to be in the crosshairs of any new targeted tax, whatever it is called.