Rates rise plan 'gut punch' for farmers

The stark contrast between irrigated and non-irrigated pasture near Patearoa in the Maniototo....
The stark contrast between irrigated and non-irrigated pasture near Patearoa in the Maniototo. Photo: Stephen Jaquiery
A proposed 18.8% rates rise by the Otago Regional Council would be another "gut punch" for farmers.

Otago Federated Farmers president Mark Patterson said the region’s farmers were suffering through a third dry summer in a row and facing huge on-farm cost increases.

An already substantial rates rise of 12% had been signalled in the council’s long-term plan — and for the council to consider an 18.8% increase instead was shocking.

"It’s a gut punch," Mr Patterson said.

Mark Patterson
Mark Patterson
"Farmers will be just aghast."

Mr Patterson, a Lawrence farmer, said Otago farmers knew central government had increasingly added to the council’s workload, but an increase of this scale went "above and beyond".

The council needed to look at ways to cover expenses without raising the money through rates.

That should include property sales, he said.

"I think some of those hard decisions have been put off," he said.

Councillors will consider proposed changes to the third year of the council’s long-term plan and the resulting financial implications this week.

A report from corporate planning manager Mike Roesler said four workshops had been held with the new council, from November to this month, ahead of tomorrow’s council meeting.

Councillors had called for maintaining the council’s present "direction" and the work programme outlined in the long-term plan.

The work programme had been adjusted only to reflect "new information and the changing work environment", Mr Roesler said.

Some other changes had been made that were fully funded by revenue other than rates, predominantly central government grants, he said.

The first year of the present long-term plan (2021-22) included a 48.5% rates increase.

The following year (2022-23) there had been another 18% increase.

This year’s increase (2023-24) was planned to be 12%, but the draft position was now 18.8%.

Part of the council’s increased spending included $1.4 million for "inflationary impacts" on staff costs.

"Other costs have also been increased to reflect inflationary and general market increases to services [the] council requires to complete the agreed work programme," Mr Roesler said.

Port Otago would still be expected to deliver a $15 million dividend.

But there would be an estimated operating deficit of $2.3 million rather than the budgeted $3.4 million surplus.

The long-term plan had anticipated a surplus due to the sales of properties at Birch and Kitchener Sts as well as Stafford St.

Those sales were now expected to happen in 2024-25, Mr Roesler said.

Last year, during annual plan discussions, councillors did not accept a recommended 20% rates rise and instead directed staff to cap the increase to the 18% signalled in the long-term plan.

Cr Gary Kelliher said at the time to do otherwise would be to treat ratepayers as a "bottomless pit".

Yesterday, he said councillors had already asked staff to find savings, but were told there were none to be found.

He agreed with Mr Patterson that farmers would take another major rates hike as a "gut punch".

He said he planned to raise his concerns with his colleagues this week.

Interim chief executive Pim Borren said there were "always savings" that could be found but staff chose to recommend an inflation-adjusted rates increase.

"We have grown ORC significantly over three years and cutting back would seem both counter-productive and counter-intuitive," Dr Borren said.

"We are trying to be fit for purpose by doing the things our communities expect from us."

ORC chairwoman Cr Gretchen Robertson said the proposed rise reflected current inflationary pressures and in dollar terms the average increase would be from $54 to $84.

Last year the council had absorbed inflationary pressures but that was no longer an option, given the significant rising costs in wages, goods and services.