Media Release 16 March 2012

[Statement from David Thornton]

Sneaky rate increases in Auckland Long Term Plan.

Residential ratepayers in Auckland will be getting fleeced a little more, and quite stealthily, if the Council’s Draft 10-year budget is approved.

This latest dip in the homeowner’s pocket is a proposal to effectively reduce rates charged to businesses and recover the consequent loss of income from homeowners through increases in residential rates.

This sleight of hand is to be achieved by applying changes to ‘differentials’ to the general rate.

Differentials are applied to the various groups of ratepayers such as residential, business, rural and farm & lifestyle, and are intended ‘to reflect differences in the levels of (council) services received or used, and to reflect the different ability of groups of ratepayers to pay’.(From Draft Long Term Plan)

This means that some ratepayers may pay more or less than others with the same value property.

Businesses pay more because their activity causes bigger wear and tear on facilities such as road maintenance due to heavy vehicle traffic, increased storm water costs.

This is also to reflect the (business) sector’s ability to pay, as businesses are able to claim back GST from rates and treat rates as a business expense.

Rural and farm/lifestyle will pay less to reflect the lower availability of council services in the rural parts of Auckland such as the lack of public transport.

The council proposes to set differentials for the next financial year at the same level as the current year, and should have a minimal effect on individual homeowners.

But – over the following ten years the council intends to reduce the business differential each year to a position where income from the general business rate differential will fall by 34% and ‘will involve progressively shifting some of the general rates from business ratepayers to other ratepayers’
This progressive reduction in business rates is totally at odds with the reasons given for applying differentials to businesses because of their greater use of council services and their ability to pay, including the benefit of GST allowances.

The council estimates that the sum transferred will be about $2.8 million [excluding GST] each year – accumulating to at least $28 million annually thereafter.

This ‘hidden’ gem appears on pages 155-157 of Volume 3 of the 984 page 4-volume Draft Long Term Plan.

I doubt many residents will have had the time or the inclination to wade through those 984 pages – or to spend hours in front of their laptops searching the electronic version of the Plan on a ‘free to all residents’ CD.

This additional cost to non-business business ratepayers will come on top of the 4.9% average annual increase already announced.

Homeowners will not be impressed with this additional burden – and no doubt will be eventually told “It was in the Draft Long –Term Plan, and you had the opportunity to make a submission”

The sheer complexity of Local Government, that has vastly increased under the huge bureaucracy that is Auckland Council, means the average ratepayer has little ability to respond to so-called consultation.

And sneaky little rates increases like the differentials changes will go undetected until it is too late. Or at least until the next local election.

Ends.

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