Editorial: Rates protest about cost, not system

Aucklanders contemplating their new regional rate demands must not allow their concerns to be derailed by an old chestnut - a review of rating systems. Local bodies would dearly like to turn any rates revolt into pressure on the Government for alternative sources of funds. Ratepayers beware; there are worse things in life than property rates. Money that the spenders need not raise is much worse. Ratepayers are also taxpayers. They gain no relief when local body activities are financed from the central Treasury rather than direct rating. Indeed, they may be worse off if local bodies are relieved of the obligation to raise the money they spend. A direct charge is a chastening experience for the charging body, as the Auckland Regional Council could now attest.

Until now it has run on revenue levied from its constituent city councils, which presented the levy to ratepayers as one of several items on their bill. Although the councils routinely blamed the ARC levy whenever their rates were under attack, the excuse did not save them from voters' revenge. So it will be for the ARC now that it must send out its own bills. It must either convince enough people that its charges are fair and its services worthwhile, or the elected members will not survive next year's vote.

It is a thoroughly healthy discipline and it must not be diminished by rating relief in the form of grants from Government coffers. Like all local bodies, the ARC complains that the Government is devolving more tasks onto local government without giving it more money to carry them out. If this is so, we seldom hear local government refusing the tasks. Like any industry it is all too happy to expand. In fact, it was lobbying for years for "power of general competence" that would enable local authorities to take on any role that Parliament had not expressly forbidden.

It needs to be noted that the costly new commitment taken on by the ARC - an upgraded passenger railway - was not foisted on the region by central Government. Far from it: successive governments have taken a sceptical view of the economics of rapid rail schemes. A scheme is going ahead now only because Auckland civic leaders, with the ARC to the fore, pressed the previous Government to make available a fund that had accumulated from the operations of the port mainly.

That fund will help to provide the capital for the upgraded railway but the running costs of the integrated public transport system will require double the subsidies of services. The extra costs of running the network and subsidising fares account for almost all of the increase in the ARC's total bill. If there is a case for an alternative source of revenue, the national petrol tax is the obvious candidate. If Auckland were to get back the proportion it pays, all forms of transport in the region could be better served.

That rate increase is about 25 per cent overall but most households' increase is much more than that because the ARC has adopted a different rating formula from that used by the councils that formerly passed on its levy. The regional rate makes no distinction between business and residential properties. All are rated on their capital value. Opinion is divided on whether that is fair but taxation on any basis is an arbitrary charge.

When rates rise alarmingly it is the spending that needs attention. Unless the spending is valid and under adequate control, no changes in the rating system will make much difference overall. There are details of the new regional rate demands that must be changed. The lack of time-payment (unless by direct bank debit) is obviously unfair to people on fixed incomes.

But the widespread concern goes beyond details, and beyond demands for business to carry a disproportionate burden. It is about the purposes to which the money will be put and the calibre of the ARC's financial control. The council is under notice.