David Thornton: Uneasy councillors bowed to rebellion

COMMENT

The Auckland Regional Council had every right, and every reason, to reintroduce a business differential into its rates policy for the coming year.

No one could ignore the huge outcry from residential ratepayers over last year's savage and inequitable rate increases, which were caused largely by dropping differentials.

Those councillors who voted to stay with last year's policy might claim to have been standing firm for the general good of the public, but the huge public protest has in the end forced a narrow majority of the council to make changes.

In the light of that protest, those councillors who did not support the change might well be thought stubborn.

Some ARC councillors have certainly taken last year's rates revolt to heart. While Ian Bradley has been singled out as one councillor who has responded to the residential ratepayers' outrage, Bill Burill and Dianne Glenn also changed their votes. Last year they had also voted in favour of no differential.

Those voting shifts were slightly offset by Craig Little's change of heart. After voting against last year's policy, he was against a business differential this year.

All this chopping and changing still resulted in only a one-vote majority for a 1.5 differential - a sure sign of a deeply divided council. This does not augur well for a body that is about to be given a substantial increase in its powers over the entire region.

Perhaps the most concerning aspect of the u-turn was the volley of vicious comments made by some business-sector lobbyists.

These represented a direct attack on residential ratepayers, who suffered huge increases last year and some of whom face big increases again this year because of poor decisions on the new transport rate.

That differential will now apply to the full rate, including the new transport rate, which has differentials applied relative to the level of public transport services available in identified areas of the region.

After 12 months of investigation and consultation, the regional council has still come up with a transport rates system that is flawed.

The new transport rate methodology does go some way to a sort of indirect user-pays, but it is too narrow. There needs to be a more multi-stepped system, including acknowledgment that rail is where the money goes. And there will be no regional rates money spent on the North Shore busway; that is paid for by Transit NZ and North Shore City ratepayers.

The introduction of the new transport rate system was also decided by a one-vote majority. As a result of that decision, all ratepayers within a large area of North Shore City will pay an average increase of 8 per cent, while the rest of the region will enjoy a residential rate decrease of up to 25 per cent.

That disparity will no doubt cause more anger among the affected ratepayers, and reveals again deficiencies in the decision-making processes of the ARC councillors.

The regional council is fond of telling everyone that one man's decrease is another man's increase - in this case, the business differential means the business sector will obviously pay more. But on a differential of 1.5, businesses will still be paying considerably less than they did two years ago, when rates were collected by local councils and a variety of business differentials were applied according to each council's policy.

This is still not a fair system. But at least these changes will bring some acknowledgment of two important factors: those who receive additional benefits should pay for them; and people should only be taxed, or rated, according to their individual ability to pay.

Businesses do enjoy tax advantages on rates paid on business-zoned properties. There might be a measure of inequity in how that applies, but not enough to distort the overall picture. Rates are a minor cost of business, whereas they can be a substantial part of the after-tax income of residential ratepayers.

Over the years, there have been many attempts to quantify the additional benefits the business sector receives from rates-funded council spending. In Auckland, we have for years listened to the business community moan about the costs of traffic congestion.

It must follow that if congestion is reduced, business will have cost reductions - a substantial benefit.

So if council spending on planning and implementing solutions to congestion - including public transport - is funded by rates, the business sector, which stands to gain, should pay a fair proportion of the rates. A business differential has become an accepted way of extracting that payment.

There is general agreement - and legal case law - that the funding structure for local authorities does not provide a clear method of attaching a specific monetary value to those additional benefits to business.

In the end it becomes a matter of political judgment and, in the case of the regional council, the political judges have spoken in favour of the people and are, therefore, perceived to be against the minority business sector.

Some business lobbyists are threatening legal action, but the courts have on many occasions declined to interfere with political decisions on rates.

We do not need a regional council that is either pro-business or anti-business, we need a council that recognises the contributions of all sectors of the community but recognises that people are the region's major asset.

Residential ratepayers are not anti-business, as has been claimed by organisations such as the Employers and Manufacturers Association, the Chamber of Commerce, and the Heart of the City group. Instead of attacking residential ratepayers, the business sector should be supporting efforts to change the whole basis of local government funding. Until that happens, we will forever be locked in battle.

Those ARC councillors who voted for a changed system this year were swayed by the sheer volume of protest from the much-maligned man in the street. Some business-sector lobbyists would call that the tyranny of the majority, but they forget we live in a democracy, which is all about people.

It is perhaps best summed up in a quote from a consultation document on the new Local Government Act that reads: "Electoral mandate is a term meaning that communities, by electing representatives to the council, give those representatives the authority to make decisions on the community's behalf. The ultimate sanction available to communities dissatisfied with the performance of their elected representatives is to elect someone else."

Amen to that.

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