Column: Rates rise bad for business

At the start of the year, I felt  positive about the excellent moves from the council with the Tourism Standing Committee, reorganisation of groups within council and work on the re-alignment of the economic strategic plan.
But the single caterer and the proposed rates-increase decisions appear to work against getting our economy moving.
Last week's rates decision suggests some people at the council table do not understand what is happening in the business world. The idea that business can afford it is misinformed.
High levels of cost increases at this time could put many companies at risk of closure. Others may have to consider  layoffs.
Many businesses depend on available discretionary income. Many of us have been so affected by the Christchurch earthquake we are directing as many of our discretionary dollars as possible to the resulting appeals.
Our retail members report they are going through one of the hardest trading periods in years.
Rotorua manufacturing and service companies have goods and services on order or delivered to Christchurch, where customers are no longer trading, have no need for the goods or can't afford to pay for them.
The tourism industry is similarly affected. Events in Christchurch are seen as happening in "New Zealand" and place a question of safety over the whole destination.
Tour operators and individual tourists are already seeing cancellations and changes to itineraries. The international tourism market has been  soft for the last few years and many of Rotorua's accommodation operators are struggling.
Last week's council committee recommendation of Model 17, to achieve an overall 3.4 per cent rates increase, would have resulted in an average 5 per cent increase for businesses.
Of greater significance, however, was an even higher level of increase of 5.95 per cent on CBD retail, 5.64 per cent on urban accommodation - mostly motels - and 5.17 per cent on CBD accommodation - mostly hotels.
Business in Rotorua is already heavily rated compared to other authorities. Research last year showed Rotorua business rates were 18 per cent higher than for equivalent businesses in Tauranga and more than three times the level for  Hamilton. Both those local authorities are enjoying annual growth rates more than 10 times'  Rotorua's.
It would be inappropriate to lay the blame for lack of growth solely on rates, but it is one of many factors affecting the business environment.
One of the underlying features of the Rotorua rating system is the historical application of a business differential. This increases the general rate levy on business to 3.6 times the base residential general rate.
The council made a commitment to progressively reduce this levy by 0.2 per cent a year, to achieve parity in 13 years. It is disappointing to see, after just one year's commitment to this strategy, it was dropped in the model recommended for this year.
- Roger Gordon is  Rotorua Chamber of Commerce chief executive