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ARC's 50% differential would breach Local Govt Act

Thursday, May 20th, 2004

ARC's 50% differential would breach Local Govt Act

The ARC rates option proposing a 50% loading on commercial property owners would add $367 to their rates but give back an average of just $11 to residential ratepayers, the Employers & Manufacturers Association (Northern) advised the ARC submission hearings this morning.

"Imposing such a differential at this stage without adequate information in support of it would put the ARC in breach of the Local Government Act 2002," said Alasdair Thompson, EMA's chief executive.

"Besides it's simply not worth it and would be grossly unjust.

"The region's 27,300 commercial property owners already pay just over $20 million (including GST) of the region's rates.

"That means commercial ratepayers making up 5.9% of the total currently pay about 17% of the region's total rates of $117 million.

"The average commercial property owner pays $733 in ARC rates, which is 3.25 times more than the average ARC residential rate of $226, largely because commercial properties usually have a higher capital value.

"Adding a 50% loading to commercial property rates would raise their average to almost $1100.

"In that case 5.9% of commercial ratepayers would be forced to pay over 25% of the region's rates.

"Forcing up the business rate at the same time that the ARC takes over responsibility for promoting business through AREDS would bring Auckland into ridicule.

"If the extra revenue from the increased business rate was spread amongst the region's 432,300 residential and other ratepayers, the rates reduction for residences and farms overall would average $23, or just $11 for residential property owners.

"The great majority of businesses are small and earn only about the average wage. Requiring them to subsidise home owners is unconscionable.

"EMA is unequivocal there is no justification to introduce a differential against business.

"No other regional council with a Capital Value rating base in New Zealand has a differential.

"No services provided by the regional council can in any way be said to attract more usage by business than other categories or ratepayer. It's likely to be the other way around.

"Other points EMA raised at the council hearings were concerns that the ARC has not introduced a Uniform Annual General Charge, and alarm that while passenger trips, revenue and subsidies are projected to rise to 3%, revenue is projected to rise only 2.5% while passenger transport costs rise by 8.7%, and the annual loss on them rises by 17.2% to $30.35 million.

"That means for instance that while train rides are expected to increase 25%, the subsidy per trip, excluding depreciation, looks like exceeding $11 per trip!"


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