A Federated Farmers survey found that rural property rates have increased by an average of 12.5% in the last year.
The survey was self-selecting so was more likely to reflect the views of people with higher rates rises, but even so that is a very high figure when inflation was less than 3% in the same period.
A good deal of the problem is that rates are based on property values which are often unrelated to a farm’s earning capacity.
“Two farms, both under Maori trusts, face $100,000 rates bills this year. Another North Island farm, also run by a Maori trust, is staring down the barrel of a 50 percent rates increase just because it farms a coastal property that could be sold or subdivided. It pays rates based on the ‘potential’ value of the land rather than its current and future economic use as a farm.
A change to a greater proportion of rates from a uniform general charge and more user-pays might help reduce rural rates but the problem is greater than who pays for what.
Initiatives by successive central governments have passed more responsibilities on to local authorities without them passing on any extra funding. That has placed a greater burden on ratepayers.
The power of general competence granted to councils has also added to costs as they’ve got involved in more activities which have to be funded, at least in part, from rates.
Then there’s the question which Fairfacts Media raised of computers in libraries competing with private enterprise.
The Oamaru Library has recently installed computers. Online research capabilities are compatible with a library but email, Skype, TradeMe, and other web-based features will be in direct competition with internet cafes.
The amalgamation of councils in Auckland will almost certainly not be the last. Rationalisation ought to reduce some costs, but that by itself won’t address the fundamental problems caused by property-based ratings system where how much you pay is not necessarily related to what services you receive.