Councils call in collectors

Debt collectors are being hired to collect library fines as councils try to protect their bottom line.

Baycorp's business from local authorities has increased 15 per cent this year, with the average value of debts increasing between 20 and 25 per cent.

General manager Joe Nel said debts included money owed for rates, building consents and even the late return, or non-return, of library books.

Baycorp collected debts for about 40 councils (including some larger councils in the Auckland region) and about half of those wanted outstanding library fines collected, he said.

As ratepayers struggle to pay their rates on time, councils are earning millions of dollars extra in penalty fees.

Meanwhile, taxpayers are slipping behind in their payments, with the IRD reporting their debt (excluding child support) was $4.7 billion in March this year, compared with $3.9bn the previous year. Taxpayers were paying $1bn in instalments by March this year compared with $824 million last year.

Councils are increasingly resorting to the threat of court action applying to put a company into liquidation or make someone bankrupt to get ratepayers to cough up. The Auckland City Council has gone to court over money owed several times in the past month.

Revenue and payment services manager Grant Baddeley said such actions were "a last resort" and some were resolved once details of the move appeared in newspaper public notices.

With the recession hitting the building and development industries hard, income was down for local authorities because of a fall in building and resource consents. Added to that is the struggle to collect money owed by the June 30 end of the financial year:

Auckland City Council alone earned $4.3m in penalty payments this year, up from $3.7m last year; and Manukau City ratepayers are also struggling to make their payments with $9m outstanding by June from a rates take of $182m. Its total debt had risen to $36.6m, up from $28.8m last year.

Manukau's financial controller Ross Chirnside said more ratepayers were having to pay a 10 per cent penalty each quarter for not paying on time. "People are finding it harder in balancing up what they can pay now, as opposed to what they delay for a little bit".

The Auckland City Council ended its financial year $17.6m in debt $13.7m of which was rates compared with $12.9m the previous year.

However, Baddeley said part of the increase related mainly to two customers who collectively owed $5m, an amount which had been paid since June.

North Shore City ended the year with $4.6m owing in rates, compared with $3.1m the previous year. Financial services manager John McLaren said the council had heard from customers that "things are tough".