Businesses will be paying more than double the rates

23 March 2012

Media release

Auckland Council confirms businesses will be paying more than double the rates of comparable residences

That Auckland Council has confirmed that its business differential rate of 2.63 was deliberately set so business would continue to contribute the same proportion of rates as under the old council appears to reinforce that they have been fixed by a subjective and essentially ‘political’ decision, says Auckland Chamber of Commerce head, Michael Barnett.

He was responding Auckland Council Finance & Strategy Chair Penny Webster commenting on an earlier Chamber of Commerce statement pointing to significant rate increases in the pipeline.

There is no escaping that the 2007 Report of the Local Government Rates Inquiry concluded that business differentials have been set in an arbitrary fashion historically and are not related well to the benefits received. Noting that differentials are generally fixed by a subjective and essentially ‘political decision, the Rates Inquiry recommended they should be abolished. Nonetheless, despite the Rates Inquiry recommendation the new Auckland Council has continued with the system. It is this that needs to be tested.

• Setting the differential rate so that council will collect the same proportion of rates revenue as it collected in 2011/12 in order to minimise change for all rate payers in the move to a single uniform rating system seems to confirm that any relationship to benefits received was not an important consideration.

The reference to seeking an opinion from the Auditor-General was strictly in regard to the fairness of a differential rate system that seems to be manifestly arbitrary and subjective, and not related in any way to the Auditor-General’s opinion of Council’s Long-term Plan statement of Proposal.

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