Media statement Wednesday, August 13th, 2003

Aucklanders have to contribute to fixing transport: ARC meeting advised

Aucklanders will have to shoulder a larger part of the responsibility for solving the region's transport problems, Alasdair Thompson, chief executive of the Employers & Manufacturers Association, told the special meeting of the Auckland Regional Council today.

He said every other regional council in New Zealand, except Hawkes Bay, bases their rates on Capital Value and none uses a differential that charges businesses more in rates than residential property owners.

Mr Thompson said it would be neither appropriate nor legal for the ARC to defer rates payments, or adopt instalment billing.

"The ARC had to put up its rates so dramatically to develop the region's public transport system," Mr Thompson said.

"Though there has been a lot of talk, regrettably public transport has been neglected for over 10 years.

"Funding transport developments based on property values is far from ideal. But the idea that business should pay more towards public transport through their property rates than residential property owners is absurd.

"Forcing business to subsidise residential property owners for public transport solutions compounds the absurdity.

"For people to say now they did not know that there was going to be a big increase in public transport expenditure also beggars belief.

"It was widely reported in the media when the ARC first released its draft annual plan. EMA itself pointed this out in our media releases and articles, as early as March 14th this year and especially on May 28th when we presented our submission to the council on its draft plan.

"The ARC followed a thorough process in arriving at its annual plan and rating policy. Ratepayers have had every opportunity to express their views to an open minded council.

"The Capital Value rating base adopted ensures commercial ratepayers pay a larger share than they would have under a Land Value rating base."

Mr Thompson also told the ARC that the view held by some commentators and councillors, the Minister of Auckland, and the Prime Minister that commercial ratepayers should pay a higher rate than others towards Auckland's public transport solutions was wrong.

"They say business can either afford more, or get a tax and GST benefit not available to others," he said.

"Three years ago the Wellington City Council was under the same delusion. The Local Government Forum had the issue examined by tax specialists and Audit NZ.

"Business owners, like everyone else cannot claim personal expenses as business expenses.

"All agreed business gets no special tax advantage when they deduct their business expenses from their income to determine their net profit or loss. In 2000 those findings were drawn to the attention of all councils in New Zealand.

"Mayor George Woods misled Aucklanders when he stated recently that businesses are advantaged by being able to claim a credit for GST paid on their rates and from expensing their rates against business revenue.

"Jim Eagles, Editor of the Business Herald couldn't have put it more succinctly in his column in Monday's Business Herald when he said:

"No less an authority than the Audit Office has ruled quote "using tax justifications for a general rates differential is both unjustifiable and unsustainable".

"The Audit Office pointed out that differentials against commercial properties creates anomalies for commercial properties used for residential purposes and for residential properties used for business. There's lots of both types in Auckland.

"The argument that business should pay more than residential property owners because they can afford more is also wrong.

"It's irrelevant, unprincipled and untrue because 82% of companies either don't make a profit, or make a loss.

"From the census statistics it is clear that the personal incomes of business owners are typically in line with the average hourly income of all New Zealanders.

"There's not a shred of evidence to support the notion that businesses or their owners have a greater ability to pay than others.

"Nonetheless commercial property owners pay over 50% of the total rates nationwide, far more than the proportionate value of property owned by businesses.

"The ARC must be given credit for deciding there should be no differential against business, and that the burden of its regrettably large rates increase should be shared among business and residents on the same basis."

Mr Thompson's submission was presented on behalf of the Employers & Manufacturers Association representing over 7,200 member businesses employing over 224,000 staff, the Property Council of New Zealand, and the Heart of the City organisation.

ENDS

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