Kleana Bins owner and operator John Cruickshank pictured in 2021. Photo / George Novak
Kleana Bins owner and operator John Cruickshank pictured in 2021. Photo / George Novak
A Tauranga rubbish collection business is facing an “obscene” near-$10,000 rate rise after the city council introduced a new industrial rating category.
The council acknowledges the “one-time” increases in rates for industrial properties are “significant” but says the new industrial rating has been designed to share the rates burden “more fairly” across all ratepayers.
Local Democracy Reporting reported in April the council’s commissioners introduced the industrial rating this year, meaning industrial properties paid a larger share of rates than before. This reduced the residential rate by about 3%.
The business had increased prices “significantly” from August 1 after holding off for two years.
If he knew his rates would go up that much, he might have factored it into his price increase, he said.
“But I mean, that’s not something you want to do either because we’ve already lost quite a few customers because of the price increase. That’s inevitable … everyone’s finding it pretty hard out there.”
He said the company would “manage” to pay the rate increase, which came on top of higher transfer station costs.
Kleana Bins owner John Cruickshank, pictured in 2021, says the $10,000 annual rates rise is 'obscene'. Photo / George Novak
He had thought about moving premises but was not keen to move from the purpose-built site, even though it was too big after downsizing the business three years ago.
Tauranga City Council introduced a ratepayer-funded rubbish bin collection service in 2021. Photo / George Novak
Cruickshank said it lost close to 60% of its business after customers switched over to the council service.
“I had to lay off more than half of my staff, which hurts a bit because some of those people have been with me for a very long time.”
Business in the Western Bay district “keeps us going” as many rural residents did not get a council service, he said.
Cruickshank said that only lasted about six weeks before the “internal issue” was “resolved”.
Landlord ‘absolutely furious’ at increase
Cruickshank’s landlord John Middleton was “absolutely shocked” and “furious” at the increase.
His bill showed a summary of yearly rates rises from 2015′s $4545 to now $28,113.
Middleton said he was not against rate increases, but an “increase of 55% over one year is just absolute nonsense”.
In his view, Kleana Bins had a “double whammy” with the rate increases and the council introducing its kerbside service.
Middleton understood the reasons for the industrial rating category, including industrial businesses being able to claim GST and tax back.
“But what I am against is that the council has to bring their own house in order and start cutting costs. If they expect businesses to have to cut costs as a result of their rates increase demands, then they’ve got to look at their own house.”
Middleton was expecting a rates reduction after appealing the council’s revaluation of his building.
Council responds
Council chief financial officer Paul Davidson said it approved a rating change in 2022 for commercial ratepayers “as a further step towards ensuring the sector pays a fair share of the city’s operating and infrastructure investment costs”.
Through the Long-term Plan 2024-34, the council proposed a new industrial category for owners of property mainly used for industrial, port, transportation, or utilities network purposes, he said.
“The intent of this was to share the rates burden more fairly across all of Tauranga’s ratepayers.”
Davidson said the industrial rate starting July 1 and commercial rates progressively introduced since 2022/23 aimed to better reflect the benefits different sectors got from council services, particularly around transportation.
He said the new rates differentials were more in line with other metropolitan councils.
For example, Tauranga industrial ratepayers now paid 2.6 times more than a residential property of the same value - a differential of 1:2.6. Hamilton’s differential was 1:2.98.
Davidson said Tauranga’s commercial differential stayed the same at 1:2.1, acknowledging cost-of-living-crisis impacts on the retail sector.
“We acknowledge that the one-time large increases in rates costs applying to many industrial properties is significant, and that it will be of little consolation to hear that this is bringing Tauranga into line with a rates differential that probably should have been applying for some time.”
He said a city-wide revaluation had seen many industrial and commercial rating units increase in value while residential rating values generally decreased, which also impacted the allocation of rates on individual properties.
Davidson said the council had fixed the future proportion of general rates revenue to 65% residential, 15% commercial and 20% industrial to provide certainty and “moderate the impact of large swings” in property values.
He said the council’s governance team would oversee the delivery of the Long-term Plan to ensure all ratepayers saw benefits from the council’s infrastructure investments aimed at creating a “more vibrant city”.
Megan Wilson is a health and general news reporter for the Bay of Plenty Times and Rotorua Daily Post. She has been a journalist since 2021.
