Slowing council rates rises

Local territorial authorities are in the midst of the rates season.

They have been preparing draft annual plans, and these are now going out for public submissions.

By towards the middle of the year final decisions will be made, and for most Otago house owners, farms and businesses the outlook is mixed. In several districts, the trend is at least downwards, and almost all draft proposals are well under the figures projected under long-term plans.

High rates rises were the dominant election issue last year and councillors seem to have taken some notice.

Despite changes at the top of the Dunedin City Council, however, its proposed increase in rates take is 7.5%, after 5.5% for the current year and 7% for the year before.

To be fair, though, the looming figure is down on what had earlier been predicted, and previous commitments gave the council little room to move. Nevertheless, the rise is still hefty, and it has come under further pressure from extra stadium funding and interest groups and interested people will, as always, be lobbying at annual plan hearings for more spending.

Queenstown Lakes' draft figure is still to be finalised for the coming year but it will follow a whopping 9.1% this year and 6% the year before. Central Otago has had a costly run; 9.9%, then 7% but now 2.8%. Clutha's tallies are 6.94% (2009-10), 3.89% (2010-11) and 3.59% (2011-12). In Waitaki the totals are 3.6%, 2.65% and 4.55%.

Once again the bigger Dunedin and the growing areas of Queenstown Lakes and Central Otago have the dubious honour of leading the way with increases.

Their councils have not only failed to keep a close enough rein on projects and operational spending, but Dunedin and Queenstown Lakes have also been quick to put capital costs on to loans. That might lessen rates increases in the short term, but interest costs mount and the future councils are burdened. Central Otago is in need of respite and the overall district rate component, which is about half the rates, is set to fall, by 0.4%.

Various wards still face substantial increases, with water services a common culprit, but any rates decreases are rare and to be celebrated.

The smaller councils lack the economies of scale of larger districts, and some of the tasks to be carried out are the same whatever the size of the council. Nevertheless, small councils seem to be able to keep a closer eye on costs as evidenced by the rates increases around Otago. But whatever their size, all councils regularly complain about what they see as unnecessary central government requirements and the impact they have on rates.

Waitaki illustrates key rating issues well. Although the overall draft increase is 4.55%, the cost of drinking water upgrades causes large variations.

Many residential properties under the Weston scheme, for example, face increases of between 15% and 20%, while many in Oamaru itself face increases well under the average because other areas are sharing water and costs from the Oamaru treatment plant. Take out the water schemes and the rates rise across the district would be 3.17%.

It is these water schemes that cause much resentment.

Many towns and small communities felt they had satisfactory supplies and high gradings.

But that changed with new standards and, suddenly, water supplies were not good enough.

Although the current Government has eased the timetable for improvements, communities still have to push ahead with expensive works.

The nature of organisations without firm oversight and without the profit imperative is to expand and for costs to grow. Fresh efforts of chief executives and councils this year to strictly control staff numbers and costs are, therefore, laudable.

A few words of warning are appropriate, nonetheless.

Sometimes cost cutting now can lead to higher costs later and to other detrimental effects.

It is important that councils do not stymie all projects and too many services. They require frugality and hard-headed decision making, and they also need the wisdom to keep their districts healthy and developing.

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