OPINION: Rates gripe one of many, writes Andrew Bydder

OPINION: It's easy to criticise councils – every week I get enough topics from concerned citizens to fill a month's worth of articles.

While each of these people have genuine complaints that deserve immediate redress, my personal goal, and that of the Hamilton Residents and Ratepayers Association, is to achieve permanent positive change. We would prefer to work with council on improvements.

One example of this is fixing how rates are calculated. The law defining this is the Local Government (Rating) Act 2002, and it is clearly a problem because most councils are breaking the law. Section 13(3) states that the rateable value must be either the capital value or the land value.

If somehow that is not clear enough, the New Zealand Society of Local Government Managers (an organisation that advises council staff on how to run councils) has published a guide to the Act which states that "combinations such as 50 per cent land value and 50 per cent capital value, are not permitted". Hamilton City Council has been mixing the rating systems for the last four years. On your rates invoice, the part calculated against capital value is described as a Targeted or Transitional rate. Perhaps staff are trying to get around the law by wordplay. 

There are a couple of problems with this. Firstly, the courts can see that its purpose is a general rate (to transition from land value to capital value as widely reported) and a different name doesn't change that. Secondly, Section 21 of the Act restricts targeted rates to no more than 30 per cent of total rates anyway.

Another source of complaints is the Separately Used or Inhabited Part (SUIP) of a rating unit. This is where a granny flat and a house on the same property get charged twice, and it is a big can of worms. The council makes a mockery of it by defining a SUIP as including unused and uninhabited buildings.

The 2002 Act is vague, but guidance can be obtained from the Ratings Powers Act 1988 which noted an SUIP was intended for parts of a farm or commercial building that may be leased separately. In any case, the current Act does not allow targeted rates to be charged on a SUIP (Section 17).

Perversely, a way around the SUIP is to subdivide into two separate properties. Section 20 requires rating units in common ownership and used jointly, such as an extended family home, to be treated as a single rating unit.

The council is exposed to legal challenges that could have profound effects on its finances. The Hamilton Residents and Ratepayers Association takes a pragmatic approach and sees rates as a necessary evil to be minimised by managing council work efficiently, so a disruption on this scale that throws the council into chaos is not a win for us.

If council staff need to twist words and numbers to such an extent so they can pretend to be in line with the Act, then maybe it is the Act that needs changing. Let us at least have a system that is robust and fair, giving councils more options and flexibility in assessing rates.

The newly minted Federation of Ratepayer Associations of New Zealand is aware of similar issues across the country. We can work with councils, sitting on both sides of the fence, to help the government revise the law. I have noticed a significant cultural shift in council staff's attitudes to the public since 2002 when the Local Government Act was passed, and I suspect the two are linked.

In everything from building consents to dog licenses, the public are now here to serve the council. Problem dog owners don't pay the license, so good owners – who don't need regulation - are charged more instead.

The origin of councils was local people discussing and coordinating their efforts for the benefit of the community. It was never about trying to extract the most money from rates, or a clever way of disguising charges, or fighting legal battles against citizens. 

Something has gone wrong. Working together will bring mutual understanding that may fix the problem.

Ultimately, the best outcome is councils where ratepayers associations are not needed.


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