Rates mix-up blamed on complexity

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The complexity of the local authority rating process has been blamed as the reason for the Ruapehu District Council having to reset its rates three times in the 2012-13 year.

The council was among several highlighted in the Auditor General's report tabled in Parliament last month.

The report covered off the local authority audits for that year and Lynn Provost, the Controller and Auditor General, said those audits raised a number of concerns about the quality of councils' rates-setting processes. As a result, she said, this was an area in which councils needed to take more care.

Ruapehu was one of two councils - the other was Waimate in the South Island - that had to reset its rates after it identified serious legal breaches in its rate-setting process.

For the Taumarunui-based authority, it meant meeting on three separate occasions because of errors in funding impact statements and rates resolutions.

In Waimate, the situation was more serious, as that council had to refund or reverse all penalties charged on its rates for 2012/13.

Ruapehu District Council chief executive Peter Till said problems for his council arose because it was in the process of simplifying its rating model, compressing more than 80 different "lines" of rating to about 20.

"In the process, we overlooked a differential that had no effect on the overall rates struck but did affect the distribution of those rates," Mr Till said.

Fortunately, the problem was discovered as part of the overall checking process and the situation was remedied before the rates were struck and rate demands sent out.

As a result, the council held an initial meeting to consider the issue, Mr Till said. The second meeting was called to consider the legal opinion and audit opinion on the proposed change, with a third meeting approving the changes.

"Apart from the need for extra council meetings, this had no impact on council operations," he said. An obvious outcome was that the council was now even more careful in checking the rates.

"Overall, the rating process is getting ever more complex and needs to be simplified."

And he said every recent attempt at legislation had further complicated the issues and one of those complications was in offering choices.

He said an example was shown up when a sewerage system was installed in the Rangataua area for public health reasons.

"We offered a choice of a one-off lump sum or capital repayments to residents.

"Potentially, that means several hundred different rates arrangements, all of which must be nominated in a rates resolution," Mr Till said.

In her report, Ms Provost said the audit on rates revenue found most local authorities had some level of compliance failure.

She said local authorities needed to "lift their game and improve their processes and practices for setting rates".

Auditors identified a broad range of compliance issues, extending from issues of a minor and technical nature that were easily remedied by councils to errors of sufficient significance.

There were problems caused by a lack of attention to detail, with some councils failing to update their practices after legislative change, while other problems could be traced back to "insufficient investment" in staff.