David Thornton: Huge rates rises unfair and unsustainable

COMMENT

For the new financial year starting on July 1, the Auckland Regional Council, no doubt anxious not to see a repeat of last year's uproar, is proposing a rate increase of just 3.2 per cent.

That increased percentage relates to the total amount the council plans to collect to pay for the services it proposes to provide.

It claims this will mean an increase of more than 4 per cent for some ratepayers; for others it will be virtually no increase because of revaluations across the region.

Last year the regional council's long-term plans promised an 18 per cent increase in rate requirement for the 2004-5 year. That is down to a 3.2 per cent rise - the result, almost entirely, of the Government diverting extra funding to the Auckland region to help to overcome traffic congestion.

With that money will come major changes to Auckland governance, which will include increased dominance of local affairs by the regional council. That makes this year's draft long-term council community plan important to all ratepayers.

The regional council has proclaimed its proposals to every ratepayer through its propaganda sheet, Region Wide, which was stuffed inside local community newspapers.

For those lucky enough to spot Region Wide and wade through it, the council talks only about next year, 2004-5, and does not reveal the rate increases proposed for the next few years.

That information is revealed in the full copy of the draft regional long-term plan, entitled Your Region. Your Future.

That future, for residential ratepayers, looks grim. Year two of the plan will see a 13.2 per cent rate increase which, when added to the present year and next year's rises, reveals a 60 per cent increase in regional council rate requirement between June last year and July next year.

And note that this 60 per cent increase applies to total regional council rate income - and with no rating differentials on businesses, that increase for residential ratepayers becomes huge compared with those halcyon days when the council rate was hidden away in that solitary one line on your local council rates bill, and had been softened by a local business differential.

While we all rejoice at the Government's largesse in returning some motoring taxes to help with traffic problems, that money comes with the tag that the region's ratepayers must also contribute more. Which makes it more important than ever that the questions "who pays" and "how much" must be revisited.

To give some credit, the regional council, after submissions from the Ratepayers Rebellion group, has included some rating options - or "variations" as it calls them - which include a business differential.

With hand on heart, the council says that, while proposing to stay with the status quo as its rating policy for next year, it will choose one of the variations "if that is the widely expressed view of the community".

One political group is calling for a minimum of a five-times business differential (five times the residential rate). That is going much too far and will not be acceptable to any business group.

However, the regional council's own officers have advised that the business sector does enjoy greater benefits than other ratepayers. The sector also enjoys the tax benefits from deducting rates and GST as a cost before tax on profits.

Similarly, rural ratepayers tend to get less benefit than urban dwellers, so a differential should be applied to rural properties.

A regional council report shows that the business sector contributed only 16.6 per cent of the regional rate take last year, compared to 27.3 per cent the previous year - the last of the old system when local councils collected the money.

To balance that huge turnaround in favour of businesses, residential ratepayers are contributing 80 per cent of the rate take this year - steeply up from 68.4 per cent under the old system.

Such a huge change is not only unfair but is unsustainable for many residential ratepayers.

The regional council must learn that all ratepayers are faced with rates bills from two councils plus water rates.

The total effect on the ratepayer's pocket of all those bills must be considered.

In North Shore City, a new study by Market Economics shows that businesses there have five times the ability to pay of residential ratepayers. Yet North Shore City residents face the highest levels of rates under regional council policies.

I have seen no such research by the council on this vital ability-to-pay issue.

A fair system for Auckland regional rates would see a business differential of between 2.4 and 3.5 per cent and a rural differential of 0.75 per cent.

That is the challenge for all ratepayers. Give the regional council a wide expression of support for a rating system based on differentials and let's see if it keeps its word and changes from a demonstrably unfair system.

If it does not, we do have local elections in six months.

* David Thornton is a spokesman for the Rates Rebellion campaign.