Media statement                   Tuesday, May 18th, 2010

Embargoed till 1pm, May 18th

Hamilton’s business rates differential not justified

At long last the additional rates paid by businesses to Hamilton City Council over and above those paid by homeowners are to come down this year, according to the Hamilton City Council Draft Annual Plan.

The rate paid by businesses is being cut from 2.27 times more than for residential properties of the same value, to 2.05 times.

The Employers & Manufacturers Association (EMA) said the reduction was a move in the right direction but fell short of what’s required.

“The cut is simply not good enough,” said Peter Atkinson on behalf of EMA Waikato at the Annual Plan hearing today.

“Planning should be underway to remove the business rates differential altogether in the interests of fairness and to help businesses grow jobs and the economy. This was recommended in the Shand report*.

“Rates for businesses should be the same as for residences because they use the same or fewer council-funded services as households do.

“Just because you are a business does not mean you use more street lighting, roads or footpaths, and certainly not libraries, parks, theatres or museums.

“Business would also welcome water being charged on the basis of the metered volume used, not by land value.

“But the council continues to hide such costs amongst the rates bill. It’s the same for rubbish.

“However, all ratepayers including business will be relieved at the lower level of rates increase (proposed to be 3.4 per cent more than last year’s rates) than in recent years, and lower than the 4.6 per cent proposed in the current Long Term Council Community Plan.

“Even so, this increase is higher than the level of inflation.

“Furthermore, Hamilton’s Draft Annual Plan shows no sign of moving its rating base from ‘land value’ to the fairer ‘capital value’.

“Efficiency gains proposed in the Draft Annual Plan are not compared with those proposed in the Long Term Plan, which means productivity improvements and their cost savings are not transparent and cannot be measured.

“On a positive note, the Council reports staff increases and other operating costs are being held.”

Another issue EMA raised is the desire to see northern North Island councils, including Hamilton’s, collaborate to plan and drive the growth of a Northern Economic Zone comprising the areas bounded by Whangarei, Auckland, Hamilton, Tauranga and Rotorua.

“We see enormous potential for this region if it can be linked by four-lane highways connecting the cities and rapid rail links, as well as integrated port and airport facilities. The Northern Economic Zone could become New Zealand’s engine for driving growth.

Mr Atkinson said, “There will be a need for significant Government expenditure to bring this about. That is why a joint council approach to government is critical. The four lane road project between Auckland and Hamilton needs to be accelerated and four laning from Hamilton to Tauranga should also be planned.”

EMA Waikato members total more than 700 local businesses and other employing organizations with a combined workforce of more than 15,000 people.

*The report of the Local Government Rates Inquiry Panel chaired by David Shand in 2007.
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