16 November 2012

Workshop looks at Council’s rating structure

At a public workshop on Friday (16 November 2012) Gisborne District Council looked at whether any changes should be made to some of its targeted rates in the next financial year.

The workshop was led by David Walker from PricewaterhouseCoopers. Rating for seven of Council’s activities was considered for immediate review. Changes to rating for soil conservation, rural fire and pest and plants this year resulted in large unforeseen rate increases for a small number of properties. A proposed remission relating to these rates is being consulted on until the end of November; if adopted it will result in rates reductions for qualifying properties. Council decided to review the basis of these three rates now.

Funding options for another four activities that need reviewing will be considered as part of a wider look at Council’s whole revenue and rating structure in 2013.

The highly targeted nature of Gisborne’s rates was highlighted by a comparison with the new Auckland Council. Auckland has 590,000 ratepayers and 10 targeted rates from which 13% of their income is generated. Gisborne has 22,000 ratepayers and 95 targeted rates from which 67% of their income is generated. This highlights the high level of complexity in Gisborne’s rating system.

Brian Wilson, chair of Finance and Monitoring Committee said that Councillors agreed that there is need to reduce the current level of complexity in Council’s rates. “We are trying to work towards a fairer rating system that the average ratepayer can understand. Our current user pays strategy has lead to a huge number of targeted rates that are difficult to look after. That results in higher overheads to manage it and causes large annual swings in rates for some ratepayers even when there are no policy changes.”

Councillors were presented with an analysis of its revenue and finance policies compared with similar sized Councils and reminded that there are no right or wrong results. “Just because other councils might do things differently does not mean Gisborne is ‘getting it wrong’”, says Mr Walker. “Gisborne District Council got a big tick from Audit NZ on its 2012-22 Ten Year Plan that included the financial strategy and all the rating policies. However, it is timely to look whether there is a more efficient way to fund services.

Council agreed to look at rating for river channel maintenance and stormwater during consultation on its Ten Year Plan in March. An analysis on how Gisborne rates for these services compared to other similar sized councils was presented at the workshop. While council agreed that the two rates still need to be looked at, this will now be done more effectively as part of the wider review.

Previously Rating for building services was through the Uniform Annual General Charge (UAGC) and was changed to a capital value base in July. Rating for resource consents was also through the UAGC but changed to be based on land value in July. Concerns about the implications of these rate changes have been raised. Council decided to review these decisions but not immediately. It will be done as part of the wider review.

A second public workshop will be held on Wednesday 28 November. The public are welcome to attend and observe.

ENDS

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