By Horiana Henderson: Council Candidate Hamilton East
Hamilton pensioners and first homeowners with equity in their homes may have missed the passing of a Council motion zeroed in on their inability to afford the rates. But, on June 24, HCC’s Finance and Monitoring Committee voted to borrow half a million dollars just to bankroll a business case for a scheme that will loan money to Hamiltonians like them – using their homes as security.
The money is Hamilton’s share of a $2.5 million business case, split with other metro councils, into the proposed Ratepayer Assistance Scheme (RAS). Under this proposed scheme, councils would create a new entity to lend money to those who can’t afford their rates. The loans would be secured against ratepayers’ homes. Council’s Chief Financial Officer Gary Connolly acknowledged that overseas experience shows pensioners would be the main target.
Critics called it a “reverse mortgage” in disguise. Councillor Andrew Bydder, citing discussions with Grey Power members and developers, said both groups were unimpressed. “While this might be treating the symptom, it risks exacerbating the problem by allowing council to continue its high-spending culture,” he warned. Another Councillor added that the “bigger story” was that rates had become so unaffordable that residents now needed loans just to pay them.
Councillor Ewan Wilson clarified with staff that the “only advantage for us being a shareholder…is we could gleam a return on the basis of ratepayers throughout the country finding themselves in difficult financial circumstances and having to borrow to cover the rates, we’ll get a return on that investment?” The answer to his question was, “Yes.”
Other key details from the meeting included:
Finance and Monitoring Committee chair Maxine van Oosten rejected Bydder’s “reverse mortgage” label instead, describing the RAS as a smarter, more flexible way for eligible ratepayers “like pensioners and in fact, first homebuyers,” to access finance to pay their rates, since they are customers that banks are unlikely to lend to.
Mayoral candidate Sarah Thomson also supported the scheme. She chastised her colleagues, saying that not investing in the RAS was a “lost opportunity.” She added, that Hamilton needed to back an initiative led by other large cities and that it would give residents the option to stay in their home as they age.
Councillor Geoff Taylor opposed the move. “Our first and only priority is to get our books in order and restrain our spending. If we do that successfully and we’ve got a rates rebate scheme, then we don’t need a scheme like this,” he said.
A narrow majority decided that we do need a scheme like this with Deputy Mayor Angela O’Leary, and Councillors Maxine van Oosten, Anna Casey-Cox, Sarah Thomson, Louise Hutt and Moko Tauariki all voting in support of borrowing half a million dollars to contribute towards the $2.5 million business case. Those that voted against were Councillors Andrew Bydder, Emma Pike, Geoff Taylor, Ewan Wilson and Maria Huata.
Hamilton is more than $1 billion in debt, paid $52 million in interest last year, and has double-digit rates increases, of 15.5%, 14.6%, 13.5%, 12.5%, locked in for this and the next three years.
The committee’s proposal signals that Council knows that rates are becoming unaffordable for a significant number of people (particularly pensioners), that people are at risk of losing their homes unless they can borrow money to pay their rates, and is prepared to exploit this situation.
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