Another tax we can't afford

The newly-formed NZ Rural Party has not taken kindly to Transport Minister Gerry Brownlee's announcement that ratepayers will pick up the $4 billion shortfall in the $12 billion spend on roads of national significance (RONS) and motorway projects.

"This is going to create a very interesting scenario regarding who is actually going to pick up the tab over the three years of this spend," party spokesman Ken Rintoul (Okaihau) said.

"Is it going to be a user pays system with the rate being attributed to the ratepayers that benefit? Or is it going to be all ratepayers in New Zealand with the argument that we all benefit, when it can be proved that most of the money will be spent on roads that are in areas that are consumer GDP and not export GDP?

"If all ratepayers are going to pay then how will the rates be calculated? Is it on an equal share per ratepayer, or a rate calculated on land value? If it is the latter then the split in predominantly rural councils will be 80 per cent rural and 20 per cent urban.

"If we divide the $4 billion by 2.5 million ratepayers by three years this equates to about $530 per annum per ratepayer. Then apply the 80/20 split and you get $850 for the average rural ratepayer and about $210 per urban ratepayer per annum."

Nor could $4 billion be taken as a fixed target, given that such projects reliably ran over budget, Mr Rintoul said, pointing to the first estimates of the Christchurch rebuild compared with the final expected costs.

"This hardly seems fair if this is the tack that is taken, as most rural ratepayers pay more than their share towards state highways now, especially if you use the old adage that the primary producers sell at wholesale, buy at full retail and pay the freight both ways," he added.

"The liability to recover these costs is going to fall on local government. When we speak to local rural communities, they keep asking when all this will stop. Doesn't the Government understand that the rural sector has no ability to recover any of these taxes imposed on them arbitrarily? They have had enough; at the moment most are only treading water, with the high dollar still having a huge impact on their livelihoods."

He suggested the Government look at prioritising what was genuinely needed and what other measures could or should be looked at.

"Maybe more freight would be put on rail if a better business model or attitude to rail was developed," he said.

"One of these days we are all going to have to live within our means. We all know it is easy to borrow money, but at times it's a real burden trying to reduce debt or debt dependency. It was quoted to me that in 2008 our government debt was approximately $10 billion, and by 2015 it could be $70 billion. We could have to pay back as much as $100 billion to clear this debt. That's approximately $25,000 per person. Worried yet?

"The worst aspect of this is that with a lot of our best talent heading overseas and fewer young people wanting to take on the risk of the family business, where will we be in 10 or 20 years, when a lot of us are trying to exit unwanted businesses? What will the real value of these businesses be even, if you can sell?"

The NZ Rural Party was encouraging the Government to look at an alternative form of borrowing such as a private public partnership model, which would allow foreign money to help pay for infrastructure investments and the true users pay for them.

"This is the true form of user pays, which, when fully consulted with the end users, might enable the Government to make a more educated assumption on users' willingness or ability to pay the cost," Mr Rintoul said.