FFNZ Survey Reveals Huge Rates Increases
Local authority rates increases averaging 7-8 percent over the next three years highlight the need for urgent change to
the way local government is funded, said Don Nicolson, Federated Farmers’ Vice President.
Mr Nicolson was commenting on a Federation analysis of 83 city, district, and regional council draft long-term council
community plans[1].
“On a nationwide basis, rates revenue will increase by 7.7 percent in 2006/07, 8.3 percent in 2007/08 and 7.4 percent in
2008/09, increases are well in excess of both inflation and population growth and coincide with an economic downturn,”
said Mr Nicolson.
For the coming year, 30 of the 85 councils intend to increase their rates revenue by more than 10 percent, with six of
the 30 set to increase by more than 20 percent (four of them regional councils). Rates rises over the next three years
will be higher in the South Island compared to the North Island and higher for regional councils compared to territorial
local authorities.
“Although the long-term plans have ten-year horizons, we confined our analysis to the next three years. Beyond that
period most local authorities forecast only small annual increases and if previous experience is anything to go by these
forecasts will quickly become redundant as new spending decisions are made,” said Mr Nicolson.
“Councils blame the rates increases on inflation in the construction sector pushing up infrastructure costs and central
government imposing new responsibilities and additional compliance costs. While they have a point, some are also
choosing to increase ‘soft’ spending on largely urban-based social and cultural activities, ‘picking winners’ in terms
of economic development and tourism promotion, and expecting farmers to pick up much of the tab when little or no
benefit is received.
“Federated Farmers is fighting back both locally and nationally. Locally, we are putting a big effort into draft
long-term council community plans. The Federation has submitted to around 60 councils this year and we had also
distributed nearly two hundred copies of Getting Rid of Ridiculous Rates – our guide on how to be heard by your council
– to help individuals make their own submissions.
“The emphasis in our local advocacy is on containing rates rises and ensuring that the rates burden is shared more
fairly with urban ratepayers, who tend to be the main users and beneficiaries of most council activities.
“Nationally, the Federation will be using the information we have gathered to put the case for substantive change to the
way local government is funded. We need a comprehensive, first-principles review of local government funding and to find
lasting alternatives to property-based rates, which are increasingly unsustainable as a way to fund people-based
services.
“For example, funding of local roads is a key issue. Local roads should be funded by road users through petrol tax and
road user charges – just like state highways are.
“Rates regularly feature in the top ten farm expenses and the projected increases will put further pressure on already
tight operating margins. Federated Farmers will therefore continue to put a high priority on rates to get a fairer deal
for our members,” said Mr Nicolson.
[1] Two of the 85 local authorities had not released their LTCCPs as at 9 June – Carterton District and Westland
District.
Ends