Business community big winner in ARC rates hike saga

By BERNARD ORSMAN

The increase in Auckland Regional Council rates was a political decision to adopt a system that hits households hardest in the pocket.

The main reason householders are receiving rates increases of 200 per cent or more is that a majority of Auckland Regional councillors decided on a new rating system that cuts rates for business.

Other reasons for the rise are:

* Choosing a capital value system that calculates rates on land and buildings.

* Increased public transport costs of 63 per cent.

* Direct rating costs of $3.2 million a year.

* Property revaluations.

Instead of adopting the normal practice of charging businesses more in rates, the ARC chose a no-differential, business-friendly rating policy.

In Auckland City, businesses pay up to 2 1/2 times the residential rates. In North Shore City, the business differential is 9.3 times the base residential rate. Business can reclaim about 48 per cent in GST and tax.

The effect of a no-differential policy is that businesses' contribution to the ARC coffers drops considerably and household ratepayers have to make up the difference.

Mike Lee, one of five ARC councillors to vote against the system of rating, said it was a "Tory budget" that benefited businesses and farmers at the expense of ordinary Aucklanders.

The other four councillors to vote against the system were Sandra Coney, Craig Little, Brian Smith and Paul Walbran.

The June 23 minutes show that seven councillors - chairwoman Gwen Bull, Judith Bassett, Ian Bradley, Bill Burrill, Dianne Glenn, Catherine Harland and Philip Sherry - pushed through the controversial rating system.

Councillor and Auckland Chamber of Commerce chief executive Michael Barnett, who made a submission on behalf of the chamber, did not vote on the advice that he could appear to be biased.

The ARC chose to ignore criticism of its decision to adopt what it calls a "simple, equitable rating policy" based on the capital value of property, including the house. Most rates are based on land value alone.

North Shore and Papakura councils warned during public submissions that any decision to rate on capital value would have a negative impact on many households.

Papakura provided a report that found capital value rates would hit the poorest households hardest because poor properties accounted for a larger proportion of capital value than they did for land value.

Part of the rise in ARC rates is due to a 63 per cent jump in the transport levy, from $36.8 million to $58.7 million. With money from Transfund, expenditure this year on transport has risen from $79.2 million to $105.8 million.

Furthermore, the transport levy is forecast to nearly double in the next seven years to $110 million.