Chris Lewis: Rates need to be fair deal for all

Rates need to be fair.

Rates are being set throughout the country as local governments prepare their long-term plans for the next three years.

These plans set out a council's focus, the activities it intends to provide and specifies which community outcomes it aims to achieve.

More important, from the ratepayer's perspective, is who is going to foot the bill for these activities.

Nationwide, Federated Farmers staff and elected members are busy studying council plans. One of the things members don't fully understand is where our membership money is spent. It has taken me a while to get my head around all the different activities the federation covers and the effort that goes into keeping 85 councils honest and fair for rural communities.

When I enter the Federated Farmers' Hamilton office all I see is mountains of folders our policy staff have to read -- within a short timeframe -- in order to write their submissions, present them and hopefully get some big wins for our members and our communities. It's a hell of a job and one I prefer to leave to the professionals.

Rates are a big expense item for the urban population and an even bigger one for rural people, especially in times like now where we are faced with low commodity prices and a high United States dollar for our exporters. Federated Farmers has a strong interest in the effective performance of local government and strives to ensure that the transparency of setting rates, and the overall cost of local government to agriculture and ratepayers, is fair.

Recently I wrote about the Waipa District Council's change to their rating mix, which will increase rates disproportionately for the rural sector of the community. They have yet to find a fair balance, but this week I want to focus on the Waikato Regional Council's plan, which is far more prudent.

The federation makes submissions on more than 60 annual plans or long-term plans each year, so our elected members and staff have a good understanding of what's reasonable.

Councils have a tough job meeting the growing legislative requirements of recent years, while saddled with an archaic system of property value rates where landowners are disproportionately charged higher on behalf of the whole community.

It is in light of this that I want to applaud the Waikato Regional Council, which has proposed a prudent draft plan with a very small overall increase in total rates of only 0.8 per cent. It is pleasing to see the council concentrating on its efficiency and effectiveness.

Not only have they made a concerted effort to be fair but their consultation documents and extensive background documents have been user-friendly. This is an important part of a being an effective council in serving ratepayers. It enables our policy advisers to engage and inform the rural community in the best way and be a conduit to ensure the council meets their needs.

If there's one major piece of feedback I'd give it is that the council needs to keep the increasing trajectory of the annual general charge for the rest of the long-term plan, not just the first year.

Full use of the charge will reduce the council's reliance on property value rates, which will reduce the significant inconsistencies between what farmers contribute to a council's public-good functions, compared with other ratepayers.

To date the annual general charge has not represented progressive good practice and is behind many other regional councils. The affordability and fairness of rates is a significant issue for farm businesses, given that in large part they are allocated on the basis of property value as opposed to income.

Further increasing the charge will not only help to relieve this burden but provide for more reasonable rating with all houses, whether they are rural or urban, paying a fairer amount for access to the same services.

The fundamental guide should be that just as the council's service of democracy benefits all ratepayers in the same way, so they should pay the same as far as possible. For those on lower incomes who struggle to afford it there is help through avenues such as the rates rebate scheme.

Chris Lewis is provincial president of Federated Farmers Waikato.