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The Dunedin City Council's rates take could increase by more than $4.7million if the Government acts on a recommendation to make tertiary institutions pay full rates.
The recommendation was included in the Productivity Commission's report on tertiary education, commissioned by the Government and released yesterday.
The report, which also made a series of other recommendations, including scrapping interest-free loans for students, said there was no ''principled justification'' for tertiary institutions not to pay full rates and the exemption led to inefficient use of assets and land.
In a submission responding to the commission's draft report, the University of Otago estimated it would have to pay an extra $4.7million in rates to the Dunedin City Council if the change was made.
This figure did not include the extra rate take the council would receive from Otago Polytechnic, or Otago Regional Council rates.
Mayor Dave Cull said yesterday he supported tertiary institutions paying rates, saying cities such as Dunedin with a high proportion of general rate-exempted land were clearly at a disadvantage.
The university and the polytechnic benefited from the services the council provided and so should pay full rates, Mr Cull said.
Such a change would ''clearly be helpful'' for the city and ratepayers and ''$4.7million is a significant amount of money''.
He believed central government should help tertiary institutions foot the bill of having to pay full rates.
In response to the commission's draft report, the university said it had no objection to paying full rates as long as the Government was willing to cover the additional cost.
It also emphasised the university still paid rates, despite not paying the full amount.
Its rates bill for the 2016-17 year was $2.1million, which included utility rates and full commercial rates for some of its buildings, including its Executive Residence hotel.
The university's rates bill would more than triple if it had to pay full rates.
''We estimate that our rates bill would increase by $4.7million if the university had to pay full rates.''
The Productivity Commission report said tertiary institutions had ''incentives to accumulate assets and to use them inefficiently''.
''Tertiary education institutions (TEIs) should contribute directly to their local communities by paying full rates.
''Exempting TEIs from paying rates has no principled justification.
''It creates costs for others in the community, and offers a competitive advantage to TEIs over private education providers and other competing organisations.''
Other commission recommendations included.-
- Abolishing university entrance (UE).
- Better quality control and self-accreditation for strong performers.
- Making it easier for students to transfer between courses.
- Better career education.
- Enabling tertiary institutions to own and control their assets.
- Making it easier for new providers to enter the system.
- Facilitating faster innovation by tertiary education providers.
Another suggestion was to scrap interest-free loans - but that was quickly shut down by Tertiary Education Minister Paul Goldsmith.
''We do not want to see young people starting their working lives with unmanageable debt,'' he said.
But Mr Goldsmith said the Government would keep an open mind on every other recommendation, including dropping UE.