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Dubious ARC decisions challenged

Wednesday, May 24th, 2005

Dubious ARC decisions challenged

Two major decisions by the Auckland Regional Council were challenged by the Employers & Manufacturers Association (Northern) when presenting its submission to the ARC today.

The ARC was asked to explain how it can:
* disregard one of its own formal resolutions of a year ago and proceed to plan for an increase in business rates, and
* spend $170 million of ratepayers' funds earmarked for transport and other infrastructure on purchasing the Ports of Auckland shares without consulting the public.

On June 28th 2004 the ARC resolved:

"That the ARC commission a report assessing whether there are additional benefits received by business which justify a differential over and above (that created) by the CV (Capital Value) system."

Subsequently the ARC commissioned the report from Associate Professor of Economics at Auckland University, Basil Sharp.

"The ARC's rates proposals this year in relation to this report are reprehensible," said Alasdair Thompson, EMA's chief executive.

"For the ARC to charge business a higher level of rates than other categories of ratepayer the council was first legally obliged to determine whether the higher rate met the requirements of the Local Government Act 2002.

"The Sharp report was originally intended to assist with that.

"It was supposed to be ready before the Council proposed its rates regime for this year, but it's still not available.

"But the ARC has gone ahead anyway to increase the business rates differential, in flagrant disregard of its own resolution and the need to observe Section 101 (a) and (b) of the Local Government Act.

"Why did it commission the report in the first place if it had no intention of taking it into account for the setting of rates?

"It was plain at today's hearings some councillors did not know the Sharp report had been commissioned or what it was for.

"If the ARC decided that, in terms of the law, business should pay higher rates than other categories of ratepayer, the council is required to explain how the present figure of charging business 60 per cent more in rates than other ratepayers was arrived at.

"On the ARC's purchase of Ports of Auckland shares, the ARC had an obligation to consult before spending $170 million of ratepayers' money because it was never intended for this purpose.

"The Infrastructure Auckland funds were intended for investing in public infrastructure such as urgently needed passenger transport, rail, and storm water systems.

"Financial analysts and economic commentators have also said the estimated return of 4.25% does not stack up as an investment.

"ARC could achieve a far higher rate of return from just about any infrastructure project you care to name.

"The ARH had to get ARC approval before undertaking a 'Material Transaction' of this scale, and to give its approval the ARC must comply with the requirements of the Local Government Act 2002 (sections 76 to 82), which specify that if the community's views are not known they must be consulted before a decision is made."


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