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FFNZ Survey Reveals Huge Rates Increases

FFNZ Survey Reveals Huge Rates Increases

Local authority rates increases averaging 7-8 percent over the next three years highlight the need for urgent change to the way local government is funded, said Don Nicolson, Federated Farmers’ Vice President.

Mr Nicolson was commenting on a Federation analysis of 83 city, district, and regional council draft long-term council community plans[1].

“On a nationwide basis, rates revenue will increase by 7.7 percent in 2006/07, 8.3 percent in 2007/08 and 7.4 percent in 2008/09, increases are well in excess of both inflation and population growth and coincide with an economic downturn,” said Mr Nicolson.

For the coming year, 30 of the 85 councils intend to increase their rates revenue by more than 10 percent, with six of the 30 set to increase by more than 20 percent (four of them regional councils). Rates rises over the next three years will be higher in the South Island compared to the North Island and higher for regional councils compared to territorial local authorities.

“Although the long-term plans have ten-year horizons, we confined our analysis to the next three years. Beyond that period most local authorities forecast only small annual increases and if previous experience is anything to go by these forecasts will quickly become redundant as new spending decisions are made,” said Mr Nicolson.

“Councils blame the rates increases on inflation in the construction sector pushing up infrastructure costs and central government imposing new responsibilities and additional compliance costs. While they have a point, some are also choosing to increase ‘soft’ spending on largely urban-based social and cultural activities, ‘picking winners’ in terms of economic development and tourism promotion, and expecting farmers to pick up much of the tab when little or no benefit is received.

“Federated Farmers is fighting back both locally and nationally. Locally, we are putting a big effort into draft long-term council community plans. The Federation has submitted to around 60 councils this year and we had also distributed nearly two hundred copies of Getting Rid of Ridiculous Rates – our guide on how to be heard by your council – to help individuals make their own submissions.

“The emphasis in our local advocacy is on containing rates rises and ensuring that the rates burden is shared more fairly with urban ratepayers, who tend to be the main users and beneficiaries of most council activities.

“Nationally, the Federation will be using the information we have gathered to put the case for substantive change to the way local government is funded. We need a comprehensive, first-principles review of local government funding and to find lasting alternatives to property-based rates, which are increasingly unsustainable as a way to fund people-based services.

“For example, funding of local roads is a key issue. Local roads should be funded by road users through petrol tax and road user charges – just like state highways are.

“Rates regularly feature in the top ten farm expenses and the projected increases will put further pressure on already tight operating margins. Federated Farmers will therefore continue to put a high priority on rates to get a fairer deal for our members,” said Mr Nicolson.

[1] Two of the 85 local authorities had not released their LTCCPs as at 9 June – Carterton District and Westland District.

Ends

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