Real alternative to ARC rates injustice

by Grant Morgan RAM spokesperson

Last year, the ARC introduced a radical change to rating policy ­ the business differential was axed.

A differential means that businesses pay a higher rate in the dollar than other ratepayers.

Until 2003, ARC rates were collected through the seven local councils. So the business differential varied widely in line with each council¹s own rating policy ­ from a high of 9.35 in North Shore to a low of 1.4 in Waitakere. Only Franklin didn¹t have any differential.

Axing the business differential was by far the main reason why most homeowners¹ ARC rates went up. And, since the differential was highest in North Shore, there the rises were most extreme.

ARC officials had forecast that the majority of homeowners would pay higher rates ³unless a differential of more than a factor of 5 was adopted². (That means businesses paying a rate in the dollar over five times more than other ratepayers.)

But the ARC didn¹t even consider the option of a differential of more than 5 ­ only of 2. And that option was rejected.

ARC officials noted that, if ARC spending remained the same, then ³over 80% of residential ratepayers in the region would pay more² without the differential.

Taking into account extra ARC spending on transport, then ³approximately 90% of residential ratepayers will pay more², said the officials.

So official ARC figures showed that less than 10% of homeowners paid higher rates because of extra ARC transport spending alone.

Yet ARC chair Gwen Bull blamed the rate rises on extra transport spending. Her comments were at odds with reports from her own officials. That must throw doubt on other statements by Mrs Bull and her ruling faction.

In this year¹s draft plan, now open to public ³consultation², the ARC proposes a $10 annual flat charge on every ratepayer for parkland purchase ³if there is a clear mandate from the community².

Sounds good, doesn¹t it? For once, the ARC seems to be accepting the need for a ³clear mandate² before imposing an extra charge on ratepayers. And who can argue against buying more ARC parks for public enjoyment?

But a huge fishhook is hidden in this seemingly innocent proposal. It sets a precedent for the introduction of a Uniform Annual General Charge. A UAGC is a flat charge imposed on all ratepayers regardless of their property value, or whether they¹re residential or business.

Under the Local Government Act, councils can raise up to 30% of rating revenue through UAGC¹s.

Last year, ARC officials stated: ³If the council had adopted a UAGC of 15%, then more than 90% of residential ratepayers would have experienced an increase.² The officials pointed out that homeowners with high value properties ³would pay less² with a UAGC.

Clearly, a UAGC would make the vast majority of homeowners worse off.

In last year¹s draft plan, said ARC officials, a 5% UAGC was ³rejected because it would be so small (approximately $11 per rating unit) that it would barely be worthwhile levying².

But suddenly, in this year¹s draft plan, the ARC is pushing a flat charge of $10 for parkland purchases.

Why the turnaround from 2003, when an $11 UAGC ³would barely be worthwhile levying², to 2004, when a $10 flat charge is being pushed harder than any other proposal in the draft plan?

There¹s only one logical answer. The ARC¹s ruling faction want to set a precedent with a seemingly small and innocent flat charge so that, in the years ahead, they can push hard for a high UAGC.

A creep towards UAGC¹s would accelerate the shift in the rating burden from the corporate elite to the grassroots majority that was begun by axing the business differential.

In this year¹s draft plan, the ARC¹s ³proposed method² of rating continues with last year¹s rating policy. In short, no business differential.

But the draft plan also includes three ³variations² as possible options. Two of these ³variations² suggest a business differential of 1.5. It almost seems like the ARC¹s ruling faction might consider a return to a differential if, as Mrs Bull says, ³that is the widely expressed view of the community².

On closer inspection, however, suspicions arise about the ruling faction¹s intentions. Consider these three points:

(1) The three ³variations² have to compete against the ruling faction¹s single ³proposed method². That means public opposition will be split three ways between the three ³variations², giving an unfair advantage to the one ³proposed method². That¹s not a level playing field.

(2) In last year¹s draft plan the ARC rejected a business differential of 2 because, in the words of ARC officials, ³a much higher differential (than 2) would be required to have a significant benefit for residential ratepayers, particularly in relation to North Shore residents². Yet now the ruling faction is putting up two ³variations² which would include a differential lower than 2 ­ even though their own officials said last year that such a small differential would have no ³significant benefit² for homeowners. So these ³variations² turn out to be the option you have when you don¹t have an option.

(3) The ARC¹s ruling faction has refused to put the only real alternative in their draft plan ­ a rating U-turn which includes a business differential of more than 5. This is being requested by RAM ­ Residents Action Movement. We ask for the ³RAM variation² to be added to the draft plan so that citizens have a real choice.

I have asked all ARC councillors to add the ³RAM variation², which includes a differential of more than 5, to the draft plan.

Will the ARC say ³yes² to this democratic proposal?

References: € ARC Rating Policy Review, 2003. € ARC newsletter Region Wide, April 2004.

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