User pays emphasis in rates report is spot on, Federated Farmers says

 5 July, 2019

The Productivity Commission’s report on local government funding is another step in a very long journey to genuine equity for farmer ratepayers, Federated Farmers says.

“To cover costs of council services, we value the emphasis in this draft report on the principle that who benefits should pay a fair amount, and that the legislative framework be changed to back this principle,” Federated Farmers local government spokesperson Andrew Maclean says.

“We agree this ‘benefit principle’ should be the primary basis for deciding cost allocations.

“Paying huge amounts of money for council services distant from farms is a key problem. Farmers need this resolved and we see potential in this report to achieve fairness,” Maclean said.

A survey conducted to support the Feds’ submission to the Productivity Commission found farmers on average pay $26,208 to their district and regional councils. A damning 97% said that they do not get value for money from their rates.

“We agree with the Commission’s findings that councils have scope to make better use of rating tools, particularly targeted rates, to achieve the benefit principle in rating systems.

“Federated Farmers has little confidence in property value-based taxes.  They can have little or no relation to consumption of council services, nor often ability to pay.

“But intelligent use of differentials, uniform charges (including the UAGC), targeted rates and use of the capital value rating base rather than land is key to achieving rate allocation on the basis of who benefits.”

Farmers’ concerns about paying for the local impacts of tourism are also well reflected in the draft report. Federated Farmers welcomes the Commission’s support for funding from the International Visitor Levy for local infrastructure, user pays, and targeted rates.

“Also very good is the report’s conclusion that the accumulated burden of regulations and standards required by central government to achieve national objectives should be funded by taxpayers, not ratepayers.”

The Commission calls for a “reset” in the central/local government relationship and an end to the “unfunded mandate” situation, in which nationally imposed standards end up costing local ratepayers.  “That’s excellent,” Maclean said, “but we note that was also a conclusion of previous reviews and we have seen no action.”

Federated Farmers looks forward to engaging with the Commission as it progresses to its final report, and will be making a further submission.