Hamilton City Council is claiming they are faced with a rapidly growing city and rising costs as the result of higher interest rates, inflation, and depreciation, and are seeking an increase in rates of $45 million in the coming year[i].
That’s a proposed increase of 19%.
Homeowners and renters alike will foot the bill for the increased rates.
The Good News is that absolutely no rate increase is required if Council management controls costs and develops a more robust plan in relation to infrastructure development.
Personnel costs, by way of example, have risen from $73 million in 2017[ii]to $113 million in 2023[iii]. That’s an increase of $40 million or 55%.
Staff numbers have increased from 1,093[iv] in 2017 to 1,469[v]Â in 2023, a 34.4% increase, with many of the additional staff seemingly going into esoteric areas such as customer, technology and transformation, community, development, growth, communications, and people and organisational performance.
But wait, we have to account for the fast population growth touted by the council, don’t we? However, between 2017 and 2023 while staff numbers increased by over 34%, the population of Hamilton City went from 165,100 to 185,300 people[vi]. This population increase reflects a total percentage increase over the period of just over 12%.
On top of the significant increase in staff costs, fees paid to consultants and professionals have risen to over $15 million in 2023 as well[vii]. Generally, in business if you decide to use external consultants it is to allow internal staff efficiencies, but this does not seem to be the case at HCC?
Despite those cost increases, we haven’t seen any significant improvement in the services we receive or the assets that Council are charged with maintaining.
What we have seen is the gradual destruction of heritage assets, the introduction of cycle lanes that are hardly used, in-lane bus stops and a rapid deterioration of our central city.
So as almost 50 cents in every dollar of rates we pay go towards staff wages, there is clearly a simple solution to these massive rates rise proposals. The great news is that rates rises can be prevented by restoring staffing levels to the level that they were in 2017 and by being more exacting on consultants and professional services.
We are all being asked to tighten our belts to pay for the proposal to more than double of rates over the next five years, perhaps it is time instead for council to truly tighten their belts. Returning to 2017 personnel costs would save $40 million. Even allowing for an increase in staff numbers at the same rate as our city’s population growth (12.2% rather than 34.4%) using 2023 average HCC staff salaries would result in a saving of over $18.5 million. (1469 – (1093 x 12.2%) x (113m/1469))
A rates increase won’t then be necessary and our rubbish bins will continue to be emptied, our city gardens will continue to be maintained and we will continue to enjoy the other services that Council provides.
Council can then use the next 2 to 3 years to reflect on the slowing economy and the effects this will have on future infrastructure needs and the cost of delivering them.
It will provide Council with time to plan rather than the knee-jerk long-term plan they are currently promoting.
Â
Â
REFERENCES
[i] HCC Annual Financial Statements page 166. Rate revenue in 2023 $238,229, add 19% (proposed rate increase 2024) equals an increase of $45,263.
[ii] HCC Annual report for 2016/17 page 70. Personnel costs total $73,119. Staff numbers that year totalled 1,093.
[iii] HCC Annual report for 2022/23 page 166. Personnel costs total $113,563. Staff numbers total 1,469.
[iv] HCC Annual report 2016/17 page 85 showing total employees.
[v] LOGIMA request dated 14 March 2024.
[vi] Infometrics, Regional Economic Profile, https://ecoprofile.infometrics.co.nz/Hamilton%2BCity/Population/Growth
[vii] HCC Annaul report for 2022/23 page 194. Professional fees $607k, consultants $13.9m, legal services $2.3m.