May 16, 2012

Low rates increase commended; unacceptable for business to pay proportionally more

Rotorua ratepayers will enjoy one of the lowest rates increases in New Zealand in the next year, proposed to be 2.9 per cent, the Employers and Manufacturers Association (EMA) said in its oral submission today on Rotorua City Council’s draft Long Term Plan.

EMA commended the Rotorua Council for keeping the rates low even though inflation is running even lower at 1.6 per cent.

“We also commended the Council for its strong emphasis on increased efficiencies by implementing such as ‘Lean thinking’ throughout the council organisation,” said EMA Executive Officer Peter Atkinson.

“But the adoption of a business differential of 220 per cent means the proportion of Rotorua’s rates paid by business will rise from 22 per cent to 28 per cent of the total council income from rates - this is unacceptable and unjustified.

“Part of this large increase is a result of the change to capital value but it means the proportion paid by farm rates drops from 14 per cent to 11 per cent, and by residential ratepayers from 64 per cent to 61 per cent.

“What’s worse is that no argument is put up in the plan for why this is to occur.

“Business doesn’t expect Rotorua’s rating policy to be reformed in one year, but in this the first year using capital value, the Council should be moving towards a fairer system not away from one.

“The differentials should be phased out on a stated timetable, desirably over five years, but certainly before the end of this 10-year plan.

“A fairer rates system would also charge a more appropriate level of Uniform Annual General Charge to all ratepayers plus targeted rates for activities which do not benefit all ratepayers, together with user-pay charges for those services which supply benefits to provate interests.

“EMA would also like to see more performance measures adopted by the Council than just ‘consumer satisfaction’.

“However it’s good to see the Council adopting ‘economic prosperity and growth’ as one of three key themes.

“Another positive is that Rotorua’s current debt levels will see the level of interest paid well below 20 per cent of the annual revenue from rates.

“This is a much lower reliance on debt (borrowing) than many other councils in New Zealand.”

www.ema.co.nz

ENDS

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