Revenue & Financing Policy - funding public transport and flood protection

by Charlotte,

Greater Wellington Regional Council (Greater Wellington) proposes changing the way we use rates to fund public transport and flood protection.

What is the Revenue and Financing Policy?

The policy sets out how we fund all our activities, including the different methods of funding we’ll use, such as general rates, targeted rates, fees and charges.

The policy isn’t about how much we intend to spend, but about how we intend to spread the costs of services across the region and among different groups of ratepayers. The policy is reviewed every three years, generally at the same time as the 10-Year Plan.

Why the proposed change?

With changes to public transport across the region, and Greater Wellington introducing a new Public Transport Operating Model, we need to change how we fund public transport.

We’ve used this opportunity to analyse how we fund all of Greater Wellington’s activities – the most comprehensive review we’ve undertaken on this policy in 20 years.

How we use rates to fund two of the largest areas of work for Greater Wellington (public transport and flood protection) could be more equitable across the region.

While how we fund public transport must change, we’re proposing a similar approach to how we fund flood protection work.

What is proposed for Public Transport?

Greater Wellington operates the Metlink network (buses, ferries and trains) and is making wide-spread improvements to the region’s public transport system.

We’re proposing to spread public transport rates more evenly across the region. Everyone will pay the same basic public transport rate, then a weighting – called a rating differential – will be used to reflect the benefits each group of ratepayers gets from the public transport network.

Under the proposed policy, most residential ratepayers would pay the same rate for public transport. The owner of a residential property in Wellington city would contribute the same amount towards public transport as the owner of a residential property of the same value in Upper Hutt or Porirua. The public transport network is less comprehensive in the Wairarapa, so residential ratepayers in this area would pay a lower rate.

The proposed changes to public transport would mean residents in the Hutt Valley, South Wairarapa and Porirua pay a little less towards public transport than they do now, while residents in Wellington city, Kāpiti and Masterton pay a bit more, and there is very little change for residents of Carterton.

What is proposed for flood protection?

Greater Wellington invests a large amount in flood protection throughout the region. Our programme includes stopbanks on our main rivers, and barrage gates at Lake Wairarapa. Approximately 90 percent of our flood protection work takes place in three areas – the Hutt Valley, Wairarapa and Kāpiti. We estimate flood protection work will cost more than $200 million in the next 10 years.

Greater Wellington proposes to change the way we fund flood protection through rates to reflect the benefits each group of ratepayers get from this work. Our proposal is that 70 percent of the cost of flood protection work is funded by a targeted rate on properties in the area where work is taking place. The remaining 30 percent will be funded by a targeted rate on all properties in the region. We all benefit from flood protection work, but the properties in the areas affected benefit the most.

Current drainage schemes in some areas will remain unchanged, but river and catchment scheme rates in some parts of Wairarapa will be renamed to avoid confusion.

The proposed approach would see residents in Kāpiti, Wairarapa and the Hutt Valley pay more for flood protection, while residents of Wellington city and Porirua would pay less. It is more in line with the way other regional councils in New Zealand fund flood protection work.

The other option is that Greater Wellington continues to fund flood protection as it has until now – with around 50-60 percent of the funding from general rates, and around 40-50 percent from a targeted rate on properties in the area where the work takes place.

Flood protection spending compared to flood protection funding 2018/19

What is the impact on my area from both of these changes?

Our proposed approach to both flood protection and public transport would mean rates reduce in some areas and increase in others. To find out more about the rates changes proposed in your area, see page 25 of the consultation document for the Long Term Plan 2018-28.

When will proposed changes take place?
The impact of the proposed changes varies according to area, so the policy recommends phasing changes in over three years from 1 July 2018. The new rating system would be fully implemented from 1 July 2021.

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