Editorial - Tuesday May 14, 2013

A fair shambles

THE Far North District Council is to be commended for its efforts to devise a fairer means of levying rates, although any genuine degree of fairness is likely to prove elusive while land value remains the fundamental tool. There never has been, still isn't and never will be anything fair about taxing people according to the value of their property, which unfailingly ignores their demand for services and their ability to pay. Rates on land value has to be the unfairest means ever devised for calculating a tax.

FNDC has emphasised the status quo's inequities with its second proposal for a supposedly fairer system. Last year it was dairy farmers and foresters who were up in arms; this year the dairy farmers have apparently been mollified, but foresters are still crying foul, and have been joined by quarry owners.

There is some water to go under the bridge before anything advances from proposed to fact, and hopefully the submission process that is now under way will lead to major changes. The more likely outcome, though, given the proposal's obvious flaws, is that it will be abandoned altogether. And it should be.

The shortcomings of this proposal, at least from a forester's or quarry owner's point of view, are serious, although the owners of industrial and commercial land might well be cheering. If the proposal is adopted as it currently stands their rates will reduce significantly, while for residential ratepayers it is of no more than academic interest, given that imposing what one critic has described as crippling rate increases on a minority will have no appreciable impact on what they will pay.

One of the more glaring problems is that the proposal to increase rates on forest land and quarries is based on land value, supposedly in a bid to ensure that those two sectors pay their "fair" share of costs involved in repairing damage done to roads by the heavy vehicles that are part and parcel of their industries. There is no way the council could defend that process, apart perhaps from arguing that any alternative would be too complex to administer. The amount of damage done to roads by heavy vehicles carting metal or logs has absolutely no relationship to the value of the land on which the metal is quarried or the trees are growing.

How the council can suggest that rating a quarry, for example, on the basis of its land value is fairer than the existing regime defies explanation. If the owners of those properties are to make a fairer contribution to the costs they incur on behalf of the council, assuming they don't already by way of road user charges, then those contributions must be calculated in terms of distance travelled and tonnage carried. That might represent an administrative nightmare for the council, and a departure from the traditional means by which rates have been struck, but anything other than that cannot be described as fair.

Foresters have other grounds for complaint. No account appears to have been taken of the fact that they wait a generation to gain any financial benefit from their investment, during which time the trees generate little if any cost for anyone.

If the damage that may be done by harvesting machinery and logging trucks when the time finally arrives, perhaps for no more than a week or two, is to be calculated the rates paid over those decades have to be considered.

Foresters are also arguing that they are producing exports (that would be more beneficially processed before they leave the Far North, but that's another story), which the council should be encouraging. Contrary to what the council seems to be believe, they say their industry is not booming, and moves to rate them as proposed could put them out of business. Massive rates on forest land would certainly do nothing to promote that industry as a viable one for the Far North, where a lot of land is not much good for a lot else. This proposal is seen by some as a cash grab by a council that is ill-informed, lacks vision and has no understanding of the potential impact of supposedly easy solutions to a greater problem.

Quarry operators point out not only that the value of the property they operate from has no bearing on the damage heavy traffic does to roads, but that the council's entire argument is flawed by a lack of information. If it is true, as one quarry operator claims, that the council has only identified half the quarries operating in the district, then the council's launching of this proposal at this time is even more preposterous. A council that doesn't even know how many quarries are operating within its boundaries has reached a point of dysfunction that has gone beyond a joke.

It should not be forgotten that the bulk of these "missing" quarries will require council consents, which presumably they do not have. It would be inconceivable, even in the Far North, that the local authority would not be aware of commercial operations to which it had granted consents.

One elected member has reportedly told one quarry operator that it should dob in the illegal opposition. It says a good deal, none of it flattering, that that should apparently represent a genuine solution as far as the council is concerned. Having had another year to work on this "fairer" rates proposal since last year's abortive attempt, the council should have been much better prepared than this.

Presumably it has considered the impact a 1000 per cent rate increase on quarries will have on ratepayers, although it is hard to believe it would be pursuing this proposal had it done so. The logic is compelling - rates go through the roof, so does the cost of metal; smaller quarries close, reducing competition; metal carriers charge more to carry more expensive metal further. And when the council is the customer, as it often is, who pays? The same ratepayers who are supposedly getting a fairer deal, including residential ratepayers who can expect to see their rates fall by enough to buy a pie and a pint for Christmas.

The actual problem is twofold. Firstly, the council is spending more than its ratepayers can afford to pay. The answer to that is to examine every component of council spending and reduce them to the minimum required to meet its core responsibilities. A deeply indebted council has to reduce its costs if increasing its revenue isn't a goer. Secondly, it is not receiving its fair share of road user charges that are generated within this district. The council is quite properly demanding that that be rectified, and should have the support of everyone in the Far North.

In any event, this proposal will likely prove to be a waste of time and money. It's dollars to doughnuts that by this time next year the Far North will be part of a Northland unitary authority, in which case it would seem wise to wait for that day to dawn before we restructure the rating system.

The angst that some are experiencing now might well be unnecessary. There are better things the council could be spending our money on than pursuing a ridiculous proposal that will either crash and burn, or, in the unlikely event that it flies, will provide the fuel for rebellion at the elections in October.