Farmers say rates increases unfair

The views from Cliff and Alex Deery's property sweep over green pasture, a wide blue bay and beyond to the islands of the Hauraki Gulf. The Kawakawa Bay couple can even see the Sky Tower from a high point on their steep property, giving them a glimpse of the big smoke, where the decisions about their rates are being made.

Under the new rates proposed in the Auckland Council's Long-Term Plan, there will be an overall rates increase of 3.6 per cent in 2012/13. However, for some rural property owners that increase will be substantially higher.

Mr Deery fears the proposed rating system will affect the viability of farming within the Auckland region, especially for farms where sheep graze with coastal views.

"As the values of these coastal properties bear no relationship to their productivity, a capital value-based rating system treats them unfairly in relation to their economics," he says.

"Some people seem to think that because we live in a very nice place we need to be punished ... But at the end of the day our rates are going up 45 per cent."

The land where Mr Deery farms sheep and cattle has been in his family for three generations.

"My grandfather started leasing it off the Maori owner in 1923 and slowly bought bits of it off him."

Add in some lease land and today the farm comes to 344ha (around 3.44sq km).

He says over the past 10 years the rates have crept up from $10,000 to $12,000. Last year's QV valuation found the Deery land was worth $1.4 million, and improvements $450,000, making a total capital value of $1.85 million.

"It's a really high rate for the farm but it's a rate we bear because of where we are."

Using the Auckland Council's online calculator, Mr Deery, 60, has figured out the farm's rates for 2012/2013. They come to $17,700.

"On top of that I will have to pay the rates on the farmland that I lease. I don't know what that is yet but we're looking at something like $20,000 all up."

He accepts paying higher rates than farms without coastal views but says paying 10 times the rates of his residential Kawakawa Bay neighbours would be hard to reconcile.

"Yet we're all one-family households.I draw about $40,000 out of the farm every 'I draw about $40,000 out of the farm every year so the rates are about half of my income. In a six-day week I will work two days for the city, one for the Government and three for myself."

His wife Alex works as a nurse and without her contribution he says the farm would barely stay afloat.

"For the reasons of economics, one man has to keep farming more and more land to keep his head above water."

And he's concerned about what the rates rise could do to farming in South Auckland.

"Will people think they would be better off doing something else?"

He's also concerned about the amount of debt the council is taking on, and its flow-on effect.

"I'm not driven by the money and I have a very simple lifestyle so I'm not so worried about myself, but I don't want it [debt] to be a millstone for the next generation. I think this rate rise is just the beginning and the city is heading for big debt loading."

Mr Deery says a capital value rating system hurts farmers and says the proposed 0.8 differential for the general rates is too high.

"The Uniform Annual General Charge could be set higher for everybody and that would spread the rate more fairly."

GROWTH UNDER THREAT

Franklin Local Board member Bill Cashmore farms sheep and cattle on 1200ha just over the hill from the Deerys.

Under the new proposal his rates would rise by 44 per cent, an increase Mr Cashmore says threatens future economic growth and export earnings for farming in the area.

"People will be forced to subdivide because these increases are taking their bottom line out."

He says local farmers he knows live on low incomes and the proposed rates are ridiculous compared to the services they receive.

"If Auckland wants to retain this green backdrop then [council] has to enable that to happen, not go rating people off their property. Sheep, onions and lettuces don't use public transport, they don't go to the zoo and they don't go to the museum."

"My neighbours pay $2000 in rates, drive to work in the city every day and use all the facilities."

He agrees with Mr Deery that a rating system based on capital value disadvantages farmers: "A commercial building with a property value of $3 million would earn a return on capital of around 7 per cent or $210,000. A dairy farm of the same value will return 1 per cent or $30,000 and a sheep farm will return 0.8 per cent or $24,000."

Mr Cashmore suggests the rates inequality can be rectified by adjusting the differentials [see panel].

"We're suggesting rural over 50ha have a differential of 0.5, that from eight to 50 hectares is 0.8 and less than one hectare be 1.0 as these are the true lifestyle blocks. That 0.2 increase for the lifestyle blocks would about cover dropping the differential for large farms."

He believes there are around 100 other local farmers in his position. "Everyone I have spoken to is gobsmacked."

Auckland Council financial policy manager Andrew Duncan says the Long Term Plan process establishes council's future projects and how it will fund them. "We have a series of investments that provide revenue; there is revenue from fees and charges and capital grants from Government for some projects.

"That leaves us with the remainder that council needs to get to provide the activities it has decided on with the community. The rating policy is how the council shares that out.

"We want to continue to collect the same amount of rates from the business sector as was collected in 2011/12 and, overall, about 34 per cent of rates will come from the business sector."

About 60 per cent of councils use the capital value system and, following the hearing period, Auckland Council's rates will be set.

Mr Duncan explains how the proposed differentials have been decided: "The extent to which you could group ratepayers into broad groups based on the services they use; the extent to which the rates which might be charged to a particular group are affordable; and the amount of change [from the previous year] that would occur."

He says because of the revaluations of Auckland properties and the council's desire to streamline its rating system, there are many changes, which will see some end up better off, while others will be hit with a significant increase.

Mr Deery and the farmers of Manukau fall into the second category. "Unless the rating differential for genuine commercial farmland is brought back to something like 0.5, our rural culture will collapse," Mr Deery said in his submission to council, which he will speak to during the public hearings.

He looks out across the farmland that his family has worked on for three generations. "It's a family heirloom ... everybody in the family wants to keep it this way."

WINNERS & LOSERS

RATES DECREASE Waitakere business and residential ratepayers; residential ratepayers in Papakura; farm and lifestyle properties in former Rodney District Council area.

RATES INCREASE Higher value properties in the former Auckland City Council area; utility businesses in the former Waitakere City Council, North Shore and Papakura; businesses in the former Franklin District Council; former Manukau City Council farms over 50ha; properties in Manukau and Franklin with more than one business or dwelling.

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