Financial crisis no excuse for massive Hamilton rates rise

Wednesday, May 11, 2011

Hamilton City Council is prescribing a bitter pill for the city’s business ratepayers: a general 8 per cent rates rise coupled with a business differential twice the residential rate.

Executive officer for the Employers and Manufacturers Association, Peter Atkinson, asked the Council how it thought business could afford cost rises of this scale at its Annual Plan hearing today.

Mr Atkinson said: “In this economic climate businesses cannot pass on rate rises this massive in prices. So how will they afford the extra costs? Is the Council trying to drive its ratepayers broke?

“It’s vital for the Council to adopt a policy of keeping rates increases at or below the rate of general inflation, which is 4 per cent.

“It is no exaggeration to say Hamilton City Council is facing a serious financial situation,” Mr Atkinson said.

“But while the economic downturn has had a serious impact on Council revenues the explanation for this position does not lie solely with external factors.

“Historically high levels of spending together with high debt levels, combined with costs increasing faster than revenues, have played a major part in creating the situation.

“Other councils are severely affected by hard times too, but not every council is proposing a large rates increase.

“For example, Auckland City is proposing a 4.9 per cent increase with Mayor Len Brown indicating further savings are likely to put the increase below 4 per cent.

“Some councils have already adopted a policy that rates should not increase by more than population growth plus inflation. Hutt City has commendably established a rule on these lines and adhered to it.

“Hamilton City Council’s planned budget cuts, delays to some projects, and putting aside more money to maintain and replace assets will all help.

“Critical to the long term viability of the Council is for it to focus on core services and a concerted effort to drive down internal costs, so we are pleased there will be a complete review of Council’s overall direction and the services it provides, to be completed in time for next year’s Long Term Council Community Plan.

“One area badly in need of review is the unprincipled practice of fixing a proportion of rates to be paid by the business sector.

“Nowhere does the Council provide extra services to business ratepayers that could justify businesses paying twice as much as residents,” he said.

EMA has more than 719 member businesses and other organisations in Hamilton including members of its Export New Zealand division. Altogether they employ about 15,390 staff who receive wages/salaries totalling $713 million per year.

ENDS

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