David Thornton: Stubborn rates line will seal ARC's fate

COMMENT

Crunch time is fast approaching for tens of thousands of ratepayers in the Auckland region - those who have withheld all or part of their Auckland Regional Council rates for the 2003-4 year.

Exactly how many defaulting ratepayers there are is a mystery. Last December there were about 100,000. By early last month that number had apparently fallen to 66,000.

Both these figures come in written communications from official ARC sources.

There is no explanation for this change and the Auditor-General should be investigating the credibility of ARC reports on its rates collection results.

Furthermore, several thousand ratepayers did not even receive their bill until late January, six months after ratepayers in the rest of the region. The ARC blames this on incorrect database information supplied by the local councils and the Auditor-General has been asked to investigate.

Draconian measures are provided under the law to ensure that people pay their lawfully due rates. That makes it all the more remarkable that almost 10 per cent of ARC ratepayers have not paid a cent. And countless thousands of others have paid less than what was demanded.

Those defaulters could be taken to court if the ARC chose that course. So far it has not, and it says it is extremely loath to take such action.

But the council has sent a second reminder letter to some, but not all, of the defaulters. It told them it would seek payment from mortgagees if ratepayers failed to pay up within seven days.

The letter was dated February 4, yet not a single ratepayer appears to have received the demand earlier than February 11, the day on which payment was due. A conspiracy theorist would point to this as a tactic aimed to frighten people into paying the moment the letter arrived.

The Rating Act does give the ARC the power to demand payment from mortgagees after November 1, for last year's unpaid rates. Before that, the ARC can apply a further 10 per cent penalty to rates unpaid after July 1.

And as the legal processes unfold, they lead down a path, through the courts, that could see bailiffs seize goods and, ultimately, the forced sale of property on which rates remain unpaid.

Such draconian measures place huge responsibilities on those who make rates policies and set rates. Many protesting ratepayers would say the ARC has failed in those responsibilities.

The rates rebellion certainly seemed to have prompted an ARC rethink, with promises of a detailed review of rating policies before the rates were set for the 2004-5 financial year.

As part of that review the ARC recently considered reports from officials on its options. One was to keep the status quo.

"Advantages" listed for that option were: no major rate increases for any particular ratepayers; relatively even level of increase (the percentage increase in the rate); and no change in policy to explain.

In other words, maintaining the status quo would be an easy option for the regional council.

The report listed the disadvantages of that course as: the ARC may be accused of not listening to those unhappy with existing policy; not reflecting results of feedback and environmental awareness survey results during transport rates review; no rate decreases for residential ratepayers; puts off resolution of problems with existing rating policy; several inequities on how groups of ratepayers are treated; may need to explain why there is no change in policy.

One would have thought that with such overwhelming disadvantages, faced with thousands of angry ratepayers and remembering its promises of reform, any reasonable council would have discarded the status quo option without a second thought.

But not the ARC. It decided by seven votes to six to keep it.

What makes this decision even more objectionable is that other options were available.

The second suggested by regional council officials included the introduction of a business differential.

The option was listed as having the following advantages: many residential ratepayers would have a rate decrease; moves business sector back towards previous share; ARC seen to be listening to last year's reaction, in particular those supporting a business differential; largely in line with feedback and environmental awareness survey results gathered during the transport rates review; reduces problems and inequities with current transport policy; while relatively complex, transport policy is easier to understand than current policy.

This picture represents the views of most residential ratepayers.

Again the report listed disadvantages. These were: introduces change; some residential ratepayers have large increases (mainly to new ratepayers in the revised transport rate structure); all business ratepayers will have large increases; complexities in explaining to business the change in policy.

One would have thought that the advantages of this option clearly outweighed the disadvantages, except perhaps for business ratepayers.

Further, ARC officials expressed support for a business differential. In their rating policy report to the council, they proposed a 1.5 differential (meaning businesses would pay 50 per cent more than residential ratepayers). They gave the following reasons:

* After further consideration it is felt that the changes last year moved the burden of rates too far from the business sector to the residential sector.

* The business sector receives some benefits of ARC rating expenditure over and above other sectors.

* Public feedback showed that, based on equity and affordability, the business sector should contribute more.

This represents a huge backdown from the position the ARC took last year and represents very closely submissions made to the ARC by residential ratepayers and local city councils during last year's annual plan consultation.

But the ARC decided not to change to this option. By seven votes to six.

In a few weeks, the public will have the opportunity to make submissions on the draft annual plan for the coming year. Rumour has it that the income from Infrastructure Auckland, which will be under ARC control, will help to keep next year's rate increase to 3 per cent.

No doubt some ARC councillors feel a low rate increase will make ratepayers happy - even with the current rates policy remaining in place. But by ignoring options for change, the majority of the members of the ARC may well have sealed their own demise at the local elections in October.

When politicians ignore their own electorates, the voters will eventually have their say.

* David Thornton is a former North Shore City councillor.