KEY POINTS:
Only a handful of people live in the improbably named Bland Bay, Whangarei district's most northern point, a picturesque drive around the Whangaruru Harbour until you get to the landslide, which has blocked the road since the storm in March.
Council workers were trying to clear the mountain
of debris but it could be a couple of months until residents can leave safely - a dirt track through the forest is the only path in or out - and last week's deluge just made matters worse.
The 20 or so permanent residents of Bland Bay take it in their stride, they're mostly elderly folk who welcome the peace and quiet that isolation from the outside world brings.
Eleven years ago, Ross White packed his bags to join the tiny community and enjoy his retirement years fishing, walking in the bush and digging his prolific vegetable garden.
His modest two-bedroom home overlooking the beach is his "life insurance policy" - prime coastal land which has soared in value in recent years.
A neighbouring "swamp" section of land is on the market for $300,000, while a house down the road can be bought for $1 million.
While Aucklanders are obsessed with a booming property market, White says the 20 or so pensioners in Bland Bay couldn't care less. In fact, the climbing value of his nest egg is a double-edged sword.
He paid $1200 in rates this year, more than he coughed up for his central Auckland home, and the Whangarei District Council plans to hike the rates by 10 per cent each year for the next decade.
White gets no water and no sewerage for that $1200 but the skyrocketing value of coastal properties - which rates are based on - means that he is effectively subsidising those Whangarei homeowners who do get these council services.
The free rubbish collection has ended - White now pays $1.40 for each bag picked up - and the council closed the refuse station.
"We get a bit of weedkiller on the side of the road. When you look at it, the elderly residents who have been here for donkey's years are just getting screwed," says White.
"We're all retired here in the bay but is our pension going up 10 per cent every year? No way, it's just unsustainable and I don't know how they can justify it.
"People say 'Oh, look how much your place is worth now' but that means nothing to us."
All but two of the country's councils are increasing rate bills this year, most between 4 and 8 per cent, again putting the financial squeeze on homeowners still reeling from big rates increases last year.
Some, such as Auckland City (5.4 per cent) are wary of a backlash in election year but propose double digit hikes until 2011 - to help get the city ready for the Rugby World Cup.
Soaring rate bills became a politically hot issue in 2006 when ratepayers threatened to revolt, forcing politicians to order an inquiry to address local government funding, costs and the rating system, which is deemed by its critics as an unfair property tax on people who are asset rich, but income poor. In two weeks' time the report will be out but David Shand, head of the three-man panel which sifted through thousands of pages of submissions and hours of meetings, is giving little away.
A former Wellington City Councillor who has worked with the World Bank and the OECD, Shand acknowledged that some people simply cannot afford to pay their rates which have crept up to an average of 3 per cent of household income.
Worse still, local councils are planning nearly $30 billion of infrastructure to be built over the next 10 years, and much of that burden will be falling on ratepayers.
But Shand says that overall, property is lightly taxed in New Zealand, and that citizens have a poor view of the rates increases because they don't understand the system.
Communities expect more and better services, says Shand, and building, maintaining and operating billions of dollars of infrastructure are a main driver of council spending.
Local authorities also have to cope with the greater responsibility of administering amendments to the Resource Management Act - monitoring brothels, dogs, swimming pool fences, gaming machines, building sites and food outlets.
More work, means more staff and wage bills at local councils have soared by more than 50 per cent in the past five years, while the number of people employed by councils has increased by more than one-third.
But it isn't only enforcing laws that councils have expanded their budgets to include. Critics say local government has moved away from its bread and butter work of water, rubbish, drains and footpaths, and are now charging ratepayers for everything from brand marketing to the arts and event management.
Although he was charged to identify spending drivers, Shand says he cannot pass judgement on council decisions.
His inquiry's limited terms of reference are "putting the cart before the horse", says Roger Kerr, of the Business Roundtable, who believes soaring rates bills are simply a symptom of out-of-control council spending.
Kerr is critical of the range of activities undertaken by councils since the Local Government Act allowed them to - such as Hamilton losing $200,000 subsidising Warriors league games and Wellington underwriting $278,000 to lure Tiger Woods to the NZ Golf Open.
"We've seen fiasco after fiasco. Councils need to stick to their knitting of core services, public goods like water, rubbish and roads," Kerr said.
As part of any reform, Kerr would like to see more uniform annual charges, more user-charges, and a legislated limit on spending which would force councils to seek ratepayer approval for "things like stadiums".
All worthy suggestions sighs Robert Nelson, group manager for corporate finance at the Auckland City Council, but "our hands are tied".
The council made similar submissions to the inquiry team but for a council to raise more money by user and uniform charges, bed taxes, or even GST, the law would need to be changed.
The Local Government Rating Act dictates to councils how they can tax ratepayers.
So when a booming property market skyrocketed - the value of one farm in Waiheke Island increased by 700 per cent over three years - the council had no choice but to increase their rates.
Similarly, a Herald on Sunday investigation into rates last year revealed that a drop in CBD commercial property values meant that more than $2.2 million was shifted from businesses to ratepayers.
Multi-million-dollar companies such as SkyCity, shopping malls and hotels received rates cuts of hundreds of thousands of dollars, while pensioners struggled to pay.
Auckland City believes rates are equitable overall, with a few exceptions, but Nelson says the perception that the money simply disappears into the council coffers is wrong. "People enjoy all those things but it's our feeling that they don't associate those with rates," says Nelson.
There are those within councils who disagree however.
North Shore City councillor David Thornton organises the No More Rates campaign and believes while core council services must be paid for, the system is all wrong.
Thornton says any tax on the estimated value of a property ignores the number of people who live there, what services they use and takes no account of the household income.
"So that all adds up to a totally unfair system. I'm not expecting much from this inquiry, just silly little bits and pieces, but not a radical change. And radical change is needed."
He wants an equal per-head charge on services such as roads, rubbish, water and stormwater, and criticises councils for their soaring salary bills.
And he says councils have no right sticking their noses into commercial enterprises, when they cannot run businesses as effectively as the private sector can.
Recent failures of council-owned businesses include:
* Environment Canterbury placing pest control company Target Pest into receivership after investing $1 million of public money.
* Invercargill City Council selling its majority stake in Bond Contracts and losing hundreds of thousands of ratepayers' dollars.
* Westland and Buller lost a combined $1m through failed business ventures.
Likewise, some ratepayers were outraged when Waitakere City Council underwrote $190,000 for the Trash to Fashion show. And 55,000 Dunedin residents will each be paying $262-plus by 2010 for a proposed rugby stadium.
Other controversial council spending of the past 12 months has included two Auckland City councillors who went on a month-long $85,000 trip around art galleries and museums in Europe and America, only to return and vote to hike rates by 13 per cent.
Pensioners and low to middle income families stung by the property boom in the big cities are not the only ones suffering from the rates burden.
Don Nicolson runs a 500-acre farm in Southland paying $6000 in rates each year. The vice-president of Federated Farmers says that farmers are paying millions of dollars to subsidise "urbanites" who have more access to council services.
"Quite often we find farms pay 10 times the rates of those living in town who have greater access for it," Nicolson says.
"The value of a property generally has little to do with modern-day services, the core services, we are way past that."
Of the 26 OECD countries, New Zealand has the third highest percentage of local government revenue coming from property tax (56 per cent) behind only Sweden and Iceland, but also the highest percentage from other revenue sources such as fees like building charges, registrations and compliance costs.
Local bodies in New Zealand also have the lowest percentage of revenue coming from grants and other tiers of central government, says Nicolson.
"It appears this Government gets off relatively lightly when it comes to local government funding."
Local Government Minister Mark Burton declined to comment on the upcoming rates inquiry.
And hopes are not high among council spending critics of any major change to the way rates are charged - or how they're spent.
Shand, however, offers one glimmer of hope. "Don't assume that there won't be some big changes recommended," he says. "Watch this space."
Where your money goes
Roads, rubbish, water? Here are some examples of what rates have been spent on:
One man's trash: Waitakere City Council underwrites the floundering Trash to Fashion show, which was struggling to attract sponsors, with a $190,000 grant.
Professional sports: Hamilton City Council spent $200,000 over two years to pay the Parramatta Eels league team to play the Warriors at Waikato Stadium. The plug was pulled earlier this year.
Tiger hunt: Wellington and Kapiti Councils spent $278,000 underwriting the NZ Golf Open to ensure that world number 1 Tiger Woods got his $5 million appearance fee.
Eradicated investments: Environment Canterbury put pest control company Target Pest into receivership after investing $1 million of ratepayers' money.
Bring back the 'Brook: Dunedin ratepayers outraged at council's suggestion to help fund a new $188m stadium to replace Carisbrook for the 2011 World Cup.
Bob the Builder: Tauranga rates go up to pay for a $41m sports facility after the council buys MP Bob Clarkson's Baypark Stadium for $12m.
A Shore thing: North Shore City pays $30m debt owed by Albany Stadium, a private enterprise.
International junkets: Auckland City Council spends $150,000 on overseas travel in one year, including trips to exotic locations such as Bologna and Bilbao.
Bloated bureaucracy: Council staff bills soar by 50 per cent in the past five years. Staff numbers increase by 30 per cent.
Rates roulette: Big Auckland businesses such as SkyCity got rates cuts of hundreds of thousands of dollars simply because CBD property values fell.
High society: Auckland Amenities Act means people from as far away as Papakura or Franklin pay for the NZ Opera and the Auckland Philharmonia in central Auckland.
