12th August 2013

[statement by David Thornton]

Council rates are fair to no-one.

Auckland Council must lead way in developing fairer system.

The list of council rate increases payable by high-profile Aucklanders in today’s New Zealand Herald serves to demonstrate the inequality of the council’s rating system.

There are many individuals in that list who are reputedly wealthy enough for big rate increases to be of little concern. On the other hand half the people on the list actually enjoy a decrease in rates, including some ‘rich-listers’.

But there are many thousands of ordinary Auckland ratepayers for whom increases of more than the 2.9% average are a burden rapidly becoming unbearable.

In fact 74% of Auckland residential ratepayers face increases above the 2.9% ‘average’ claimed by Mayor Len Brown.

The 2.9% in fact refers to the percentage increase in total rates income the council aims to collect.

Rates are regarded as a tax and most taxes are directly related to income or consumption – Income Tax, GST, Excise duty, Road User charges etc.

Council rates are not directly related to either income or consumption.

They are based largely on estimated property values on a certain date, in the case of Auckland, July 1st 2011.

This suggests that the question of ‘value for money’ is not a consideration when rates are set.

Worse is yet to come for Auckland with a general property due revaluation next year.

This will lead to more changes in rateable values, leading to a wide range of higher and lower rates increases depending on where you live.

At a time of low inflation and modest salary increases the effect of council rates increases can be significant for many families.

I asked the Council earlier this year to institute its own inquiry into the current rating system with the aim of developing a fairer system.

With more than a third of the nation’s population the Auckland Council is in a prime position to take up this challenge to develop a system which is fair to most, and focuses on ability to pay and value for money.

ends

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