Utilities up in arms at higher tax

By CHRIS DANIELS

Power, gas and telecommunications companies are lobbying hard to be excluded from being charged local council rates, because they say it would be an unfair tax on their businesses.

The Auckland City Council is the only local authority in New Zealand to charge rates for the pipes and cables utilities run around the city.

All councils are allowed to do so, but the method most councils use to calculate rates bills makes it difficult for them to levy the utilities.

Parliament's local government select committee is looking at new legislation that could spare utilities the shock of a big annual bill.

Vector chief executive Dr Patrick Strange said the payment of rates in Auckland City would soon be the company's third-largest cost.

He said the council was asking the lines company, which operates in Auckland, Manukau and Papakura, to pay $700,000 in rates for its new 9.2km $70 million underground tunnel.

The tunnel carries electricity cables into downtown Auckland.

Dr Strange said a tunnel did not go to a museum or catch the bus, so it was no burden on the council. "It's a total tax," he said.

"Our biggest concern is that if Auckland and Manukau adopt that approach, our rates will go from less than $500,000 a year to more than $4.5 million annually.

"This would be around 10 per cent of total costs."

He said that every time a power line was put underground or a conductor was removed, Vector's rates bill increased.

At present, Vector pays rates only for land used in the Manukau and Papakura areas.

The Auckland City Council finance director, David Rankin, said the system of charging utilities rates was designed to spread the load as fairly as possible.

Though it was true that Vector paid more rates as soon as it increased the value of its network, this was the same for any other business that made improvements.

All councils in the Auckland region, apart from Auckland City, have joined to seek a valuation on utilities in their areas.

This is expected to be known before the start of the next financial year, when a decision on whether to charge utilities can be made.

The legal and regulatory manager at UnitedNetworks, Jennie Vickers, said new legislation being considered by the parliamentary committee should exclude utilities from paying rates, as with the system used for railways and wharves.

The idea of charging utilities rates was daft, she said.

A network might have cables or pipes going through several local authorities, each one using a different method to charge rates.

Such an increase in charges would just be passed on to customers of the power, gas or telecoms company.

This would have a big impact on those with low incomes, Jennie Vickers said.

She was confident that the select committee understood the concerns of utility companies but that any decision to make utilities pay would be a political one.

Jennie Vickers said most local authorities had yet to show any great enthusiasm for charging utilities rates on lines and pipes.