Media statement Monday, May 9, 2011

Rates increase of 10.4 per cent excessive

Tauranga businesses are upset at facing a massive rates increase of 10.4 per cent, the Employers and Manufacturers Association (EMA) told the Tauranga City Council’s planning hearings today.

“We endorse the council’s debt reduction plan but the proposed 10.4 per cent rate increase for 2011-2012 is simply excessive,” said EMA executive Peter Atkinson.

“We request and expect the Tauranga City Council to adopt a policy of keeping rates increases at or below the rate of general inflation which is currently four per cent,” he said.

“Some New Zealand councils have adopted a policy to ensure rates do not increase by more than population growth plus inflation - Hutt City has established a rule on these lines and adhered to it.

“We recommend Tauranga do the same.

“EMA believes it is incumbent on all local government, particularly in the present recessionary environment, to strive to keep their rates increases at or below the rate of general inflation.

“In the budget proposed for July 2011 to June 2012 the Tauranga council is planning to save $33 million by deferring and/or cutting back on previously forecast expenditure and to use these deferred savings to reduce debt.

“But though desirable, paying off debt is not a going to solve all Tauranga’s problems in the short term since, even with the massive rates increase, debt is expected to be $370 million this year and $395 million next year or just short of the 10-year plan forecast of $410 million.

“If there are to be increases in council investment then they should be highlighted with new revenue streams clearly identified for funding and paying for them.

“We acknowledge the City faces a difficult situation because of static income, higher costs and these higher than desirable debt levels.

“However, in the present environment business cannot afford to have any extra costs passed on in the form of higher prices.”

EMA has more than 324 member businesses and other organisations in the Tauranga district including members of Export New Zealand. Together they employ more than 5,400 staff who receive wages/salaries totaling around $260 million per year.

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