Government patience with the Auckland Council may be beginning to run out.
Minister Steven Joyce and Transport MInister Simon Bridges are thought to be applying pressure to the Council to get its house in order.
While over the weekend Mayor Phil Goff was trumpeting an imminent announcement on congestion charging for the city, it appears that the announcement will simply be the terms of reference for the inquiry into congestion charging.
That follows on the Auckland Transport Alignment Project agreement between the Government and the Council which was signed in September last year.
It does not bring forward the introduction of congestion charging.
Instead, in the short term, the Government wants to see the Council put itself in a position to provide more funding and to be able to borrow more to fund transport projects.
On Friday, Finance Minister Steven Joyce told the Auckland Employers’ and Manufacturers’ Association that the Government was waiting for the Council to take steps which would allow it to raise its debt limit.
Those steps would be a belief by the Government that the Council needs to cut its costs.
But instead, the emphasis from the Council has been on raising revenue through devices like last week’s targeted rate for hotels and motels.
The rate is being billed as a “bed tax” but strictly speaking, it’s not.
It would implement a targeted rate on commercial accommodation providers based on their capital value. This could see a 150% to 300% rates increase for businesses.
This means it will not apply equally to competing for accomodaiton providers in the city.
The backlash from that sector is likely to be intense.
Goff told TV3’s “The Nation” over the weekend that the Council worked under a debt to revenue ratio which means it cannot borrow more than 265% of its revenue.
“We’re already at about 256%,” he said.
Joyce has indicated the Government is willing to help the Council raise the limit.
But privately Joyce is making it clear he wants to see the Council start to cut some of its costs before he agrees to do that.
Goff, in the same interview on “The Nation” suggested that the Government could return to Auckland a proportionate share of the GST paid in the city.
But, again, that will meet with the same reception in Joyce’s office.
First, Governments are very reluctant to rebate GST to the people who paid it and second; the belief in the Beehive will be that it still ducks the question – when is the Council going to address its costs.
The other option facing the Council is to sell off its stakes in the Ports of Auckland and the Auckland International Airport.
While there are good commercial arguments for both moves, Beehive sources suggest the Government is not going to push too hard on those proposals at present.
The Government knows it is in a politically dangerous standoff on transport in Auckland.
Traffic congestion will be a big election issue in the city.
Goff knows that which is why he is trying to string the Government out.
But ultimately the Beehive holds the cards — expect the pressure on Goff and the Council to intensify over the coming weeks.
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