Rates Inquiry Delivers the Goods - for Big Business

Media coverage of the Rates Inquiry report released yesterday makes it sound like either the best thing since sliced bread, or a non-event. Neither could be further from the truth.

This is a back-to-the-future blast from the past, pure neo-liberalism and financial prescription worthy of Rogernomics or Ruth Richardson - but for local government this time.

Renters Will Pay
Though this Report focuses on rates and ratepayers, its recommendations if carried out would inevitably hit hardest the large and growing proportion of people who can't afford home ownership. Who would pay not only any increased charges of their landlords through rent, but bigger water and wastewater, rubbish and other user charges - but with no access to rates rebates, which landlords might pocket on their own behalf.

The Rates Inquiry panel wants more user charges, volumetric charges for water and wastewater with no need to form a company; privatisation through public/private partnerships (PPPs) for water and roads, with tolls; even higher petrol taxes; that Councils justify not selling strategic essential services like ports and airports; collect rates from schools and hospitals; and with central government, keep a close eye on the 'affordability' of rates for "the two lowest income quartiles" - that's us ordinary people, at least half the population.

Abolition of business differentials
They know they'll need to. A $mega-million transfer of the rates burden from businesses, onto households, is the single biggest change they recommend. This abolition of differential rates has long been the holy grail for big business, demanded most recently by the Employers & Manufacturers Association in their big ads campaign with the gangsterish title "Fix Auckland - Once and For All".

Its impact to increase residential rates is so significant that Councils would have five years, to 2012, to prepare, though no legislation is needed. But apparently so insignificant to the Rates Inquiry panel that their 298-page report provides no figures at all on the dollar magnitude of this seismically regressive rating change.

However Wellington is said to collect 50% of total rates from business differentials, other cities "somewhat less than 50%", so clearly the Rates Inquiry panel would have us ordinary city dwellers going transparently into the even greater poverty of artificially created dormitory suburbs.

No UAGCs Much More Flat Charges
Abolishing uniform annual charges (UAGCs) might sound good on the TV news, but the recommendation is that these be replaced with uniform targeted rates, that is, more flat charges. And that the 30% cap, as a proportion of rates, be abolished.

As Citizens Against Privatisation wasted our time to point out to the Rates Inquiry, this cap already results in flat charges comprising 80% or more of supposedly progressive property-valued rates for low-income families in the Auckland region.

The Report's Summary suggests "limiting any possible regressive impact" - of households paying business' share of the rates, new flat charges, more user pays, especially for water and wastewater - by a 50% cap on flat targeted rates. But this doesn't make it into the list of 96 Recommendations. Perhaps someone on the panel can count.

Water, Roads, For Sale Sign
Even the recommendation to stop cross-subsidy of other Council activities by Council Controlled Organisations, that appears to be aimed at Metrowater's inflated user charges subsidising rates for the rich and big business, could be undone by another above urging accountability for adequate rates of return on capital invested - the very same justification recently adopted by Auckland City's mayor and others for rocketing water prices here.

As well as recommending that Councils can charge user pays for wastewater, without having to form a company - on the wishlist for instance for Waitakere and North Shore City Councils against staunch community opposition for years - the Rates Inquiry wants "an actual and reasonable cost recovery basis" and "removal of any Government limits" on these, or any other, fees.

This classic market-speak for unreasonable charging to reduce water use by those unable to pay, would alone result in massive reductions in rates for the wealthy, like the $44,000 one Remuera property has saved since Metrowater was set up.

The World Bank and IMF credentials of Chairman of the Rates Inquiry panel, David Shand, are on show here, in the promotion of desirability of public/private partnerships, especially for water services and roads, which the Report wants facilitated by removal of legislative barriers to road tolls, and by extension of even the 15-year limit on privatisation of water services through PPPs.

It is a little disturbing, however, that such a world class expert thinks Papakura's water services have been privatised as a BOOT (Build, Own, Operate,Transfer), not as one of his extolled PPPs, franchised for 30 years to United Water.

Can't Hear Won't Listen
Back in February at Mt Smart at a Rates Inquiry consultation day, members of Citizens Against Privatisation were astounded to hear David Shand assert from the Chair to assembled Councillors that, "Costs could be saved by user charges".

Of course they couldn't, we told them later, but you want the working class to pay. The Rates Inquiry took care not to meet most of the working class by scheduling all their public consultation in working hours (their pm means after noon, not, at night).

Not so surprising then, that they also recommend for local government, "more selective and streamlined consultation to replace current consultation arrangements". Ironically, this Report notes submitters to the Rates Inquiry complaining that Councils approach consultation "with pre-determined views".

What CAP said
Citizens Against Privatisation submission in April to the Rates Inquiry concluded:

"Demand the best rating system for the working class majority - no flat or user charges.
Undo privatisation and franchising, commercialisation and contracting-out of Council services.
Increase rates for big business and the rich, so they do pay their share.
Hands off what's left!

Yeah right.

ends

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