Rate rises drive islander on to benefit

Paul Nash bought his property 25 years ago for $40,000 but faces rates on a valuation of $1.7 million. Picture / Richard Robinson

Waiheke Island resident Paul Nash says he will go on the invalid benefit to pay this year's rates bill of $3940 from the Auckland City Council.

Rates are the biggest bill for Mr Nash, who lives a frugal life on a 0.8ha scrub-covered section he bought 25 years ago for $40,000 at Onetangi.

After being a sickness beneficiary for five years, the 54-year-old got off welfare and back into work last year, earning $14,000 as a computer contractor.

It was sufficient income to pay council rates of $1624 and Auckland Regional Council rates of about $300.

Not any more. Mr Nash's council rates have soared 142 per cent to $3941 this year, largely because the value of his property has more than tripled from $500,000 to $1.7 million in the latest three-yearly revaluation. His ARC rates are set to double.

Even with a $500 rates rebate from the Government and by seeking a $1500 accommodation supplement, Mr Nash said he could not afford this year's rates.

He planned to go on the invalid benefit of $217 a week, which would allow him still to earn $9000 a year.

Mr Nash, who suffers from stress disorder, said the rates increase was adding to the stress and "making it impossible to function properly".

The size of this year's rates increases - 13.4 per cent for the average household and greater for people with big increases in property values - was creating huge distress and financial upheaval for a lot of vulnerable people, he said.

Mr Nash said he did not believe the council rated highly enough, saying it needed to spend more on the shortage of social and other civic amenities expected of a decent-sized city.

But he also said the council should have a cap on rates so that no one paid more than 15 per cent more in one year, "instead of putting a blindfold on and sticking a tail on the end of the donkey".

"The council has quite a lot of flexibility in the way it tags the rate it strikes against various properties ... The fact it chooses this particular way does cause hardship for some people," Mr Nash said.

Asked if he had considered selling his property and down-sizing, Mr Nash said he was not interested in being driven off the land and home he had built himself.

Besides, having $1.7 million "burning a hole in my pocket would not be healthy".

Last year, the ARC introduced a rates-smoothing mechanism to address big swings in rates across the seven councils. Each year, the properties of two or more councils are revalued.

The mechanism used property information from Quotable Value, audited by an independent valuer, to smooth the impact of property revaluations within the region and give a fairer spread of rates in each year.

By using the smoothing mechanism, ARC rates in Rodney and Waitakere increased by 22.3 per cent and 10.5 per cent respectively last year.

If the mechanism had not been used, the ARC rates increases would have been 61.1 per cent and 46.5 per cent respectively.

Auckland City finance general manager Andrew McKenzie said the council had not considered the mechanism to smooth rates because the law for estimating property values applied to regional councils, not local councils.

Mr McKenzie said the council conducted revaluations every three years at a cost of about $1.5 million. To smooth the values annually would mean going through the entire revaluation process every year at substantial cost.

Hauraki Islands councillor Faye Storer said rising valuations and rate rises of 35 per cent or more were giving people a terrible fright.

"It's not acceptable and it's not sustainable. We need to find a sustainable system and we should be going to Wellington and saying this can't continue. We are not prepared to take the brunt of all the criticism," she said.

Robert Gray, who lives in Bombay and has a holiday home at Cowes Bay on Waiheke, said his rates on Waiheke had increased 37 per cent this year to $3353. The rates from Franklin District Council on his home in Bombay had gone up 13 per cent to $1647.