Quest for ways to ease rates burden

The Eden Park revamp will cost ratepayers $100 million plus.

Local Government Minister Mark Burton is not ruling out Government contributions in lieu of rates for Crown-owned properties as councils seek new revenue sources to take the burden off ratepayers.

A rates exemption for schools, universities, hospitals and other Crown properties is a sore point among cash-hungry councils and is among the "policy options" being considered by a local government funding project exploring alternatives to rates.

Mike Reid, governance manager for Local Government New Zealand, said the Government was receptive to the idea but would want an efficient system that could involve making an annual payment to each council in lieu of rates.

A firm of economists was looking at the issue, he said.

Mr Burton said the Government was working with councils to see if present rating arrangements were sustainable in the long-term.

"Crown contributions in lieu of rates on Crown land are being looked at in this work, but it is too early to indicate possible outcomes."

The funding project was due to report to the central Government-local government forum in October.

Mr Reid said Government contributions to councils had increased 50 per cent in five years, from 8 per cent to 12 per cent of councils' income.

He said a mechanism was needed for the Government to help where local projects created a national benefit, such as the $320 million upgrade of Eden Park for the Rugby World Cup.

The upgrade has been sprung on Auckland City's 162,000 ratepayers, who are being primed to pay $100 million-plus while neighbouring councils do not pay a cent.

Last month, the Heart of the City business group said the Government should give councils a fraction of its $50 billion tax take to revolutionise cities such as Auckland and ease the growing burden on ratepayers.

As little as 2 per cent of taxes would generate $1 billion a year to councils, of which Auckland would get $300 million to $400 million, to provide a "more socially equitable and robust revenue base", said Heart of the City chief executive Alex Swney.

Auckland City chief executive David Rankin said there was no perfect or popular form of raising taxes, be it rates, income tax or GST.

The rating system had downsides for people retiring on fixed incomes with rising property values, and revaluations leading to big rises and falls in rates between suburbs.

Another "philosophical" issue was the use of uniform annual charges.

Uniform charges, favoured by right-leaning politicians, evened out rates bills but created large percentage increases for low-value property owners.

Avoiding uniform annual charges, favoured by left-leaning politicians, kept rates down on low-value properties but led to steep dollar increases for high-value properties.

Mr Rankin said Auckland City was constantly looking for alternatives to rates.


BIG MONEY

* Local government income $4.625 billion.

* Ratepayers' contribution $2.64bn (57 pc).

* Government grants and subsidies $555m (12 pc).

* Investments $300m (6.25 pc).

* Fees and fines $230m (5 pc).

* Other sources such as user charges $900m (19.5 pc).

Source: Department of Internal Affairs, 2004 figures