Part C: Summary of our financial approach
Explaining your rates
Funding rates over the next 10 years
The average rates increase is 3.5 percent over the first 3 years of this plan and an average of 4.0 percent over 10 years. This is after accounting for the following:
- Growth in the rating base, which reduces the impact of the overall rates increase on existing ratepayers. We have assumed an average growth in the ratepayer base of 0.9 percent per year over the 10 years of the plan.
- The introduction of a targeted rate for the tourism sector from 2020/21. While the total amount of rates will be unchanged, the share of the rates paid by other (non-tourism sector) ratepayers will be lower by the equivalent of 2.8 percent of total rates.
Year-on-year rates increase in value ($m) and percentage
Indicative rates for the first year of this planTop
The table on page 176 shows the indicative residential and commercial property rates (inclusive of GST) for 2018/19.
Making sure rates are kept affordableTop
We have set rates increase limits to make sure rates are kept affordable over time. These limits are:
- an annual limit of $350 million of rates funding for each of the first 3 years of the plan
- an annual limit of $495 million of rates funding for each of the 10 years of the plan.
The increase limit is to stay within the cap of $350 million for years 1-3, and $495 million for each of the 10 years of the plan. This can be calculated by taking the rates limit less the rates funding requirement from the prior financial year. Our forecast rates and rates increases are within these limits each year of the 10-year plan.