Forestry leaders want a cap on differentials that can push rates up over 500%. Photo / RNZ, Nick Monro
By Gianina Schwanecke of RNZ
The forestry sector is calling for a cap on rates increases after one forestry block’s rates bill went up 570% in a year.
The 1100-hectare block near Wairoa managed by agri-advisory firm Lewis Tucker was originally farmland but was bought in 2019 and planted in pines in 2020.
Lewis Tucker said in July last year that the Wairoa District Council lifted the annual rates bill from $30,000 a year to $200,000.
In a submission to the Government’s proposal to simplify local government, the company said while it broadly supported the proposals, limits on differential rates were critical for business confidence.
Executive director Colin Jacobs said the 570% rates increase on that one forestry block amounts to $5 million over the lifetime of the forest.
“There’s been no reason given to us as to why a forestry company should pay such large differential rates; what costs are we causing that justifies that increased rate?”
He said the rates increase raised questions about the financial viability of the forest.
“While there has been no explanation for the increase, the assumption is that the extra $5m that this property will now pay in rates over the life of the forest will go to pay for the impact of forestry on roads come harvest time.
“However, Wairoa District Council has applied the differential rating only to forests planted after 31 December 1989, not those planted earlier.
“This suggests that the council’s concern is not the impact of forestry on roading, as a differential rate is being applied only to forests registered in the ETS,” Lewis Tucker’s submission said.
It said there will not be a harvest truck anywhere near this property for at least 25 years.
The company is calling for a cap on, or doing away with entirely, the amount councils can charge in relation to different land use.
“A cap on rates increases will not prevent exorbitant rates increases for industries targeted by differentials.”
Wairoa District Council’s forestry differentials were changed in 2022 following a review, which sought to better recognise the negative impacts caused by forestry, particularly the hollowing out of rural communities as farmland is converted.
The Forest Owner’s Association unsuccessfully challenged this by Judicial Review in the High Court, with the Court of Appeal upholding the council’s rating review.
Association chief executive Dr Elizabeth Heeg said it would like a “soft cap” on differential rates.
“Foresters just want to be a fair member of the community.
“There are times when it’s appropriate to have differential rates, but having a differential where the rates are going up over 500% is not fair.
“We’ll be proposing a soft cap that is accompanied by the introduction of good taxation principles to local government legislation to ensure that when councils are rating us, that it’s based on an actual need in the community and that it’s not just a differential that’s just a secondary form of regulation.”
Wairoa council chief executive Matt Lawson said the increase in rates related to the change in land use, with the property categorised as vacant forestry before the 2024 Quotable Value revaluation reclassified it as exotic forestry.
He said most benefits arising from forestry go out of Wairoa - wages, profits and opportunities - while Wairoa was left with the challenge of rural roads affected by heavy logging trucks.
Meanwhile, Local Government New Zealand has said the proposal to cap rates could undermine efforts to strengthen emergency management.
LGNZ president Rehette Stoltz said while the Government has included proposed variations to rates caps for unforeseen and urgent situations, as they are proposed to be primarily available only after a significant event, it limits councils’ ability to invest proactively in reducing risk.
- RNZ