Feds push to prevent rates hike

Farmers in Rotorua district are facing rate increases of up to 23 per cent.

The past two months have demanded a big advocacy effort from Federated Farmers on council long-term financial plans.

Putting the case for farmers on council rates and spending is not easy work. All ratepayers are struggling with the cost of councils, but for farmers the stakes are particularly high.

A 10 per cent increase can mean $1000 or more to be found from farm income. Compounding increases, year upon year, can really hurt the business.

Federated Farmers is among the first and last lines of defence on farm rates, being an annual submitter to councils and a strong lobby for change at national level.

We do this because of the huge cost of rates to our individual members, for many well over $10,000 a year, and the damaging effect this has on the farming economy.

Farmers are particularly vulnerable to local government's costs because rating systems are based on property value, in which lies much of the capital of a farm business, along with the residence.

There is consultation each year on council spending, and every third year on rating policy - this year being one of those with the addition of longer term financial forecasts bundled together into what is referred to as a Long Term Plan.

There is a lot of cynicism about process these days, but good advocacy requires involvement and evidence shows as a sector, farming needs to be there at rates time. Federated Farmers has taken each long term plan, and there are many, drilling deep into the spending and revenue policies to work out where rates are going and why. While time-consuming and confounding, this analysis is necessary to making constructive proposals to councils on better ways to rate farmland for the limited benefits of local government.

This year has been particularly challenging for the new approach to consultation adopted by councils in response to changes to the Local Government Act.

Councils have released a more brochure-style document for ratepayers to consider, with an array of supporting documents accessible online.

Some councils have taken this on in good spirit and seen to it that the rating impacts of spending proposals are clear, the cost of debt to ratepayers is covered, along with the impacts of any changes to the rating system.

Among others, the Thames-Coromandel council did well in the North Island, and Waitaki in the south.

Others have been something of a disaster; heavy on feel-good pictures but missing vital information on rating revenue and expenditure. This year has produced some alarming rate increases on farmland. Localised events perhaps, but they point to the overall unpredictability of this already high cost. Farmers in Rotorua are fighting rate increases of up to 23 per cent, arising in large part from a subtle change in rating policy to reduce the use of uniform charges in favour of funding from the capital value general rate.

For example, an increase of $1995 on a reasonably sized dairy farm that is already facing a massive drop in income this year. Farmers are paying big rates for tourism promotion among many other things and are really at the tipping point with the Rotorua District Council.

Waipa District Council is facing the ire of farmers with sizeable leaps in farm rates -- again through a switcheroo in rating policy.

Forty farmers got to the hearing supporting a submission from the Federation showing farmers' rates for community facilities such as the museum are more than five times those of other residents.

Elsewhere, we've seen rates hikes on farms of more than 20 per cent down south, and much in the way of increases at 3-5 per cent which are thought restrained in today's world. There have been some rate reductions on farmland this year -- but those districts are proving to be isolated.

Containing the rates on farms is an ongoing battle for Federated Farmers, and an area of expertise and value essential to a farming economy made vulnerable by a hopelessly inequitable system of paying for local government.