Rates performance nothing to raise a glass to, Feds says

28 November, 2019

It’s pretty telling when your cost hikes outrun even those of booze and cigarettes.

Council rates and fees outstripped every other consumer price index cost group between 2000 and 2019, the Federated Farmers 2019 Rates Report shows.

“It’s pretty much expected that prices of alcohol and tobacco products shoot up, especially with regular government tax increases, and indeed they jumped 120% in the last two decades,” Feds President Katie Milne says.

“But local authorities left them for dead, hiking their costs more than 170% - more than three times the CPI for all cost groups in New Zealand.”

For comparison, food prices went up just over 50% in the same period, transport costs went up about 30%, and communications costs actually dropped 30%.

“Farmers – and many other ratepayers – are desperate for some sort of handbrake on out of control rates rises we’re seeing in most parts of the country but if anything, many councils are signaling more of the same, if not an acceleration.”

The Feds’ Rates Report details the organisation’s battles up and down the land to put a lid on farm rates bills that commonly run into tens of thousands of dollars.

“We notched some wins for farmers in Thames, Hauraki, Horowhenua, Hawke’s Bay and Christchurch, and persuaded a number of councils that increases in annual charges rather than general rates better reflected consumption of council services and the ‘user pays’ principle,” Katie says.

“Over-reliance on property value rates is archaic, inequitable, and essentially a ball and chain on local progress.”

More cost pressures are coming.  Smaller councils in particular are being overwhelmed by demands for better core infrastructure.  The government re-inserted the ‘four wellbeings’ back into the Local Government Act but provides no cheque to help councils with the extra costs.  And the local government sector is rife with the buzzword ‘localism’ – that is de-centralisation of service provision and councils stepping into areas that have been the preserve of central government.

“Federated Farmers had pinned its hopes on the Productivity Commission’s inquiry into local government financing but its initial findings were underwhelming from a rural perspective,” Katie says.

“Of most interest to us was the Commission’s proposal that allocation of rates should be based on who benefits from council services.  Federated Farmers has argued that for years.  The benefit principle is already in the Local Government Act but councils can – and do – easily choose to ignore it.

“We very much appreciate one suggested pathway – that councils would use targeted rates and uniform charges for the bulk of their rates revenue – but adamantly oppose the idea that the rest should come from a simple land value general rate, which would have a hugely punitive effect on farmland,” Katie says.

“Federated Farmers continues to engage with the Commission, which has been very receptive to our considerable local knowledge, and we await its final report to the Government at the end of November.”