Low-income rates burden concern

The Dunedin City Council will explore ways to ease the burden on low-income households as the prospect of a 6.5% rates rise looms.

But a push by Cr Lee Vandervis to also ease the burden on the city’s commercial sector — by shifting the burden for millions of dollars worth of council revenue back on to the residential sector — failed to win support.

The moves came as councillors met yesterday to consider what to include in the council’s 2020-21 draft annual plan, before public consultation.

The pre-draft budget includes a 6.5% rates increase, fuelled in part the need to offset a $3.5million drop in operating surplus at the Green Island landfill.

Lee Vandervis
Lee Vandervis

The rates increase was also fuelled by an extra $5.3million in depreciation costs, and plans to add 27 new fulltime-equivalent staff, among other costs.

The extra staff would add $4.8million (or 7.4%) to the council’s staff costs, but many were needed to tackle work associated with city growth, council chief executive Sue Bidrose said yesterday.

Others, such as building consent officers, would generate their own revenue for the council, she said.

The wider budget likewise reflected the demands placed on the council to cater for growth in Dunedin, Dr Bidrose said.

But she also sounded a note of caution, saying last year’s property revaluations in Dunedin shifted more burden for rates revenue on to the city’s lower value properties.

Some lower-value parts of the city had seen the biggest increases in valuations, and some households in those areas would face a larger proportion of the 6.5% rates increase, she said.

Mayor Aaron Hawkins responded by seeking a report with options to shift that balance back, by making greater use of general residential rates — rather than fixed charges — in future.

At present, residential rates were delivered through both mechanisms, but general rates — calculated based on property values — provided the best way to charge those with the greatest ability to pay, he argued.

Fixed charges were ‘‘inherently regressive’’, hitting lowest-income people the hardest, he believed.

Councillors voted unanimously to support Mr Hawkins’ move, although Cr Vandervis then argued the council should make another change.

He proposed reducing the burden on commercial ratepayers — thereby shifting more on to the residential sector — to encourage the city’s economy to ‘‘thrive’’.

At present, the council charged commercial ratepayers more than residential ones, based on a differential of 2.5.

That compared unfavourably with Christchurch (1.66) and Invercargill (1), but favourably with Auckland (2.74) and Hamilton (2.569).

Cr Vandervis proposed reducing Dunedin’s differential to 1.66, to compete with Christchurch, while arguing the change would be offset by extra investment, economic growth, new businesses and jobs.

Cr David Benson-Pope rejected the ‘‘simplistic claptrap’’, before being forced to apologise, but maintained shifting more of the burden on to the residential sector was ‘‘just ridiculous’’.

Councillors rejected the idea 12-2, only Cr Doug Hall supporting Cr Vandervis, and instead voted to seek a report on all property category differentials for next year’s long-term plan hearing.

Earlier, a push by Cr Vandervis — supported by Cr Jules Radich — to cap the council’s increased staff costs at 3% was also voted down, 12-2.

chris.morris@odt.co.nz

Comments

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And for all those that believed and argued the 'urban myth' that a rise in property CV doesn't increase your rates.......here is the proof.
I find it unbelievable that council wouldn't cap staff costs! Then further to this, Sue likes the idea to take on 27 more staff for another $5m. All the while cuddling up to her massive salary. You lot should be taking a decrease in your salaries. Your performance is appalling. Green Island took in $3.5m less than expected, which, will lengthen the time the landfill has, yet, we need a rate rise to cover the 'loss'. Which just shows, the DCC are in such a financial scramble that they depended on landfill fees to top up the coffers! Then they want a $60m city upgrade, but can't and haven't done squat to get Smooth Hill landfill underway, while risking the fact we may need to 'export' our rubbish at huge cost! Hillarious! So now they turn to the, good old blind and gullible ratepayer, asking us for a big increase in rates, on top of the automatic increase DCC will recieve from the latest property CV's. DCC, books and plans are a shameful mess! And we're all paying for your folly! The city is just fine as it is.......FIX THE JOLLY BASICS!!!

There’s an easy way to improve rates affordability and restrain local government spending IF the political will was there to do it. Make the rates rebate a cost on local government, rather than central government, and tie the amount to the cost of living as well as people’s incomes. Then councils could estimate reasonably accurately how much the total low income rates’ rebate was going to cost them each year and have to budget for this when they are deciding how much to spend. The present system does nothing to encourage financial prudence, on the contrary, merely a view that central government will pick up the tab when councils overspend and cause low income home owners financial hardship. The rebate has recently been increased ....by $10. See: https://www.beehive.govt.nz/release/minister-announces-increase-rates-re... This is arguably a token gesture and leaves the serious problem of local government overspending not addressed.

Cr Doug Hall supported Cr Vandervis aiming to decrease business rates thus increasing resident rates! Did I read that correctly? We residents need an apology for that suggestion.

Yes you read that correctly.

It is appropriate that commercial rate payers pay more than residential rate payers in Dunedin.
Every week we see articles in the ODT suggesting some form of council funding to "improve the economy". Whether it's an event at the stadium, accommodating cruise ship tourists, discussing water front plans, it seems so much of the council's spending is focussed on "improving the economy".

What does that mean though. If you don't own a business in Dunedin does your income increase when the economy improves? No. Time and time again this has been shown not to be the case. Employers take on more staff, not pay existing staff more.

So, do the costs to residents decrease? No, if anything they rise as higher pressure is put on existing infrastructure. House prices or rent levels are a classic example.

Even the council doesn't benefit, because they don't get an increase in income like the central government does via taxes when the economy improves.

If you think an improved economy is better for everyone, I suggest you explore how. Some businesses, yes. Residents, no.

It's high time we stop believing the trickle-down theory proven to be nothing more than propaganda since 1984.

It's more and more apparent that 'locals' throughout the land are paying for the business world and in particular anything associated with tourism. If we want a new facility we have to say 'the tourists would love it'- everything from a park bench to an upgraded walking track. It is time we stopped to say what do the residents want from their rates.

Commercial properties generally have much higher capital values than residential properties. So even if the rate in the dollar for commercial and residential properties were identical, overall, commercial properties would be paying more. They also pay user charges. And since rural properties are usually much bigger, even when their rate in the dollar is lower, they will be paying more, while often receiving little benefit from city services. The main reason why an asset tax is used to raise local government revenue is that it is so easy to collect because it’s a charge on property and if it’s not paid the property can be sold. There’s nothing fair about it for ANYONE - home owners, business owners and farmers alike. What Mayor Hawkins is reported as saying about uniform general charges doesn’t seem right to me. I always thought uniform general charges were intended to buffer the unfairness of rating on property value. And NO! - higher property valuations do not cause a rates increase. Council decisions do. Such as the ones made in the last ‘ambitious’ DCC Long Term Plan. See here: https://www.odt.co.nz/news/dunedin/dcc/dcc-850m-plan-adopted

I must be a simpleton. All I want is to pay lower rates than I did when living in MANHATTAN and to get my rubbish bin included in the deal.

I guess I just expect too much...

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