Goff told not to treat business as easy target in budget

A lobby group has told Mayor Phil Goff not to treat business as an easy cost-saving target.

Heart of the City is calling on Auckland Council not to treat business ratepayers as an easy target in its drive to save costs.

In his first budget, Mayor Phil Goff has set a "core objective" that all ratepayers receive a general rates increase of 2.5 per cent.

This has meant postponing a policy of reducing business rates for one year. In 2013, Auckland Council decided to reduce the rates differential between businesses and residential properties over a period of 20 years.

The "core objective" does not apply to hotel and accommodation providers being targeted by Goff's "bed tax" to raise $15 million to $18m to pay a share of tourism and events funding by Auckland Tourism, Events and Economic Development (Ateed).

Heart of the City chief executive Viv Beck is urging the council to honour its commitment to reduce the business rates differential ahead of a budget meeting on Thursday.

"We made it clear in our submission on the draft budget that the process to reduce the business rates differential should continue without a break. We are seeing a disturbing trend that businesses are being seen as an easy target," Beck said.

"Council recognised the importance of business in growing the economy and providing jobs when it introduced the rates reduction. Continuing to push for ad hoc rating changes is reneging on this promise.

"There seems to be an assumption that business can afford it, but many businesses are small to medium in size without large reserves to draw on to cover unexpected costs."

Heart of the City chief executive Viv Beck.

Goff said he had received very little pushback from the business community on pausing the rates differential, saying they got a very favourable deal on a three-year interim transport levy that weighed heavily on household ratepayers.

"I'm very conscious business has to do well to generate jobs and prosperity and I'm trying to enter into partnerships with the corporate sector," said Goff, giving the example of the council-Vector project to light up the Auckland Harbour bridge.

Beck is urging Goff and councillors to pause and consider the impact of ongoing rating uncertainty on businesses in their areas.

Heart of the City also does not support Goff's proposal to fund tourism promotion through a targeted rate on accommodation providers, known as the "bed tax".

"We need an effective way to fund infrastructure but a targeted rate on accommodation providers is not the right mechanism," Beck said.

"It's an unfair fix that will be difficult to implement at short notice, particularly as it will hit property owners in the first instance."

She said businesses in Auckland's CBD already make a significant contribution to the development and revitalisation of the city centre through the City Centre Targeted Rate.

"Given this, and the commitment in 2013 to reduce the business differential, we urge council to honour its commitment to business and cease this practice of short-term fixes that load costs on to business.

"We don't want to be back again next year facing the same problem with a different name.'

Goff said the hotel and accommodation sector was being asked to pay half the cost of tourism and events - from 100 per cent in an earlier proposal - and did not believe the wider business community is hugely upset about it.

The targeted rate was hardly oppressive at about $3 to $6 a night for most hotels and $1 to $3 for motels, Goff said.

Thursday's vote on the targeted rate was "going to be very close" said Goff, who added it was the first test of councillors' resolve to broaden council's revenue base instead of loading everything on the ratepayer.

Meanwhile, Tourism Industry Aotearoa has received legal advice saying Auckland commercial accommodation providers cannot legally pass the costs of a targeted rate to their guests as a surcharge.

TIA chief executive Chris Roberts said the mayor and council had been insistent that the targeted rate could be added to room costs as a surcharge, despite the commercial accommodation sector being clear this couldn't happen.

"Now we have legal advice that leaves the situation in no doubt. Adding a surcharge to cover council rates potentially breaches both the Fair Trading Act and the Commerce Act," he said.

TIA have shared the legal opinion with Goff and councillors.