Changes were made to the way rates were charged in Wairoa last year, shifting the focus from fixed charges to capital value and setting a differential rate for forestry properites.
The differential rate for forestry is more than twice that of commercial properties, four times that of residential properties, and more than five times the rates paid by farmers.
As a result, foresters say their rates have risen 56 per cent, adding to previous increases which meant that rates for five of the forestry companies had tripled over four years.
The changes followed 30 years of shifting land use in the district, which has fewer than 10,000 people, an unemployment rate double the national average and a median household income of $42,700, compared with $75,700 for all of New Zealand.
Forestry operators, buoyed by government subsidies and carbon credits, have been expanding into the district and taking over beef and sheep farms, sometimes paying up to twice their value when they come on to the market.
The council in reviewing its rates system last year argued that the expansion of forestry from marginal land onto formerly productive land "has significant negative impacts on the future wellbeing of the district".
This echoed an economic development report commissioned by the council in 2019 which identified the expansion of forestry onto prime farmland close to good roads as a "potentially significant threat to Wairoa's future prosperity".
Little said there were now fewer people farming, shearing and fencing, and the business area in Wairoa township had become a "shadow" of what it once was.
Little said in an affidavit to the court that while he could not say that increasing forestry was the sole cause of the decline in the town's business area, "the reality is that whereas there were previously two or three families living on a farm, there is now none".
Meanwhile, forestry trucks were having a "huge impact" on the district's roads.
"About 25 per cent of the council's entire budget is spent maintaining rural roads and the additional impact … from forestry traffic needs to be taken into account," Little said.
The changes to the rating system meant that the owners of about 1000 properties overall would pay more in rates, but 2000 would pay less.
The increases impacted the forestry sector the most – 115 forestry ratepayers would pay a total of $334,000 more.
The council's rates income of $16.5 million remained the same.
The forest owners, represented in court by the New Zealand Forest Owners Association (NZFOA), argued that the rating changes were unfair and unreasonable and, in particular, improperly targeted them because they were wealthy.
The NZFOA said the council was using its rating powers to try and discourage the conversion of farmland to forestry. It said the council was acting unreasonably and failed to take into account environmental wellbeing and climate change.
It said the council was also mistaken in the assumption that forestry was a cause of "negative wellbeing" for the district, and that forestry owners had no constraints on their ability to pay disproportionately more in rates than other ratepayers.
One of the forestry companies, Pan Pac, said it employed 400 people directly in the Hawke's Bay region, and another 400 contractors. It said it had job vacancies in Wairoa.
The council argued that although there were many benefits of forestry on a national and regional basis, and jobs, "those opportunities arose outside of our district".
