Thursday, March 29, 2012

Rating Toward Auckland Monoculture


In the Mayor's message to Auckland in the Draft Long Term Plan 2012-2022 out for consultation now we read the following: "...properties of equal value will be paying equal rates, wherever you are in the region. Properties in Takapuna will be rated at the same level as those in Titirangi and those in Takanini..."

This drastic simplification is one solution available to the Council in compliance with the law requiring it to produce one rating system for the region. The same "one size fits all" approach is being applied to dog licences, rubbish collection, and I dare say to a whole heap of council services which have been applied in different ways and with different priorities across Auckland by the previous different City Councils.

There are lots of nice-sounding words used to describe this process. Like "harmonisation".

But is this gross simplification of Auckland's rating system justified? Especially in light of the fact that the impact of the Auckland council's rating proposals will be a massive increase in rates for those in properties of above average capital value, matched by a corresponding decrease in rates for those living in properties of lower than average value.

The Local Government Act calls for a Funding Impact Statement. In fact it's a requirement. I couldn't find one in Auckland Council's draft long term plan. To give you an idea of what one of these looks like check this one from Tasman District Council. You will see that the Council has assessed the level of service that different parts of the district receive, and this has been translated in a "cents in the dollar" rating value, by service type. In other words your rates contribute toward the cost of the services that you get.

Auckland suburbs are not the same. So why should they pay the same rates for the same house value? Over the years the costs of living (including rates), and the priorities for Council expenditure (parks, clean beaches, free swimming pools etc) - have influenced the decisions of people in where they choose to live. That is called choice and is fundamental to the development of diverse communities within the city conurbation that is Auckland. These communities have developed over more than a hundred years - some of them. Other communities are more recent. But they are not the same. Nor have they had the same services. Nor has their development been subject to the same planning rules.

In its time the Auckland Regional Council recognised that different communities benefited from different levels of public transport service. For example some communities were close to rail services, high frequency bus services, or the Northern Busway. And houses of the same value paid different rates as a consequence. This is rational and fair. It is also transparent. Ratepayers can examine the Funding Impact Statement and understand what services they are paying for with their rates, and they can also understand why they might pay more rates - for example - for sewer infrastructure (because of the amenity of local beaches), for public transport, for rubbish collection using pay-by-bag (instead of bins). And so on.

Auckland Council's harmonisation is more like Stalinisation. This might suit Council's bureaucracy and internal systems, but surely Auckland is entitled to a little more sophistication and diversity in service delivery and rating from its new Council. And surely Council can find room for fairness in its rates.

Just because someone is living in a home with more than average Capital Value, does not automatically mean they have the ability to pay significantly more than average rates. I know that Councils generally take the view that home value is a rough proxy of the ability to pay. But many pensioners and pensioner couples on fixed incomes who have lived in modest sized family homes and had families should not then find themselves suddenly rated out of their homes because the Council has not properly thought through the consequences of its blunt proposals - particularly a UAGC set at $350.

3 comments:

The cat who walks said...

I think you are correct in pointing out that the “uniform” rating system will have adverse effects on diversity. I would add that it may also incentivise sprawl. Higher capital values and higher rates in the centre of the city will drive those on lower incomes towards the periphery and significantly increase the pressure to convert farmland into suburban housing. It seems unlikely that developers will get to pay the full costs of the required infrastructure which will be subsidised by higher rates from the older, established suburbs.

The economic and social consequences of the planned shift in the rates burden seems to have been ignored – I have not been able to find any evidence of it in the Council’s public deliberations.

mark said...

Rodney Rural is 7M better off! - and they just had a couple paras saying they talked to experts and came up with 80% of normal residential!

My view is that for the first few years no one should pay less than they did for same servcies.

Also rural has extra costs = greater roading km per property - greater commercial truck use than normal residential, greater cost of providing outlying services - all were already factored into existing Rodney costs structures.

So what's changed? just the ability to get 1.3m to cross subsidise!

Even if 80% was right - why not move to it slowly, as Council do with reducing the commercial differential.

Chris Fletcher said...

Thank you for highlighting the unfair decision of the Auckland Council on rating and the LTP. This council decision in the draft plan has the ability to drive many long term residents out of their homes. The assumption that the property value reflects household income is a nonsense and sadly many older residents on fixed incomes are going to be forced from their homes in the central, northern and eastern suburbs where property valuations have increased. The majority of the council appears disinterested in their plight. Good on you for bringing advocacy to this.

Chris Fletcher

Thursday, March 29, 2012

Rating Toward Auckland Monoculture


In the Mayor's message to Auckland in the Draft Long Term Plan 2012-2022 out for consultation now we read the following: "...properties of equal value will be paying equal rates, wherever you are in the region. Properties in Takapuna will be rated at the same level as those in Titirangi and those in Takanini..."

This drastic simplification is one solution available to the Council in compliance with the law requiring it to produce one rating system for the region. The same "one size fits all" approach is being applied to dog licences, rubbish collection, and I dare say to a whole heap of council services which have been applied in different ways and with different priorities across Auckland by the previous different City Councils.

There are lots of nice-sounding words used to describe this process. Like "harmonisation".

But is this gross simplification of Auckland's rating system justified? Especially in light of the fact that the impact of the Auckland council's rating proposals will be a massive increase in rates for those in properties of above average capital value, matched by a corresponding decrease in rates for those living in properties of lower than average value.

The Local Government Act calls for a Funding Impact Statement. In fact it's a requirement. I couldn't find one in Auckland Council's draft long term plan. To give you an idea of what one of these looks like check this one from Tasman District Council. You will see that the Council has assessed the level of service that different parts of the district receive, and this has been translated in a "cents in the dollar" rating value, by service type. In other words your rates contribute toward the cost of the services that you get.

Auckland suburbs are not the same. So why should they pay the same rates for the same house value? Over the years the costs of living (including rates), and the priorities for Council expenditure (parks, clean beaches, free swimming pools etc) - have influenced the decisions of people in where they choose to live. That is called choice and is fundamental to the development of diverse communities within the city conurbation that is Auckland. These communities have developed over more than a hundred years - some of them. Other communities are more recent. But they are not the same. Nor have they had the same services. Nor has their development been subject to the same planning rules.

In its time the Auckland Regional Council recognised that different communities benefited from different levels of public transport service. For example some communities were close to rail services, high frequency bus services, or the Northern Busway. And houses of the same value paid different rates as a consequence. This is rational and fair. It is also transparent. Ratepayers can examine the Funding Impact Statement and understand what services they are paying for with their rates, and they can also understand why they might pay more rates - for example - for sewer infrastructure (because of the amenity of local beaches), for public transport, for rubbish collection using pay-by-bag (instead of bins). And so on.

Auckland Council's harmonisation is more like Stalinisation. This might suit Council's bureaucracy and internal systems, but surely Auckland is entitled to a little more sophistication and diversity in service delivery and rating from its new Council. And surely Council can find room for fairness in its rates.

Just because someone is living in a home with more than average Capital Value, does not automatically mean they have the ability to pay significantly more than average rates. I know that Councils generally take the view that home value is a rough proxy of the ability to pay. But many pensioners and pensioner couples on fixed incomes who have lived in modest sized family homes and had families should not then find themselves suddenly rated out of their homes because the Council has not properly thought through the consequences of its blunt proposals - particularly a UAGC set at $350.

3 comments:

The cat who walks said...

I think you are correct in pointing out that the “uniform” rating system will have adverse effects on diversity. I would add that it may also incentivise sprawl. Higher capital values and higher rates in the centre of the city will drive those on lower incomes towards the periphery and significantly increase the pressure to convert farmland into suburban housing. It seems unlikely that developers will get to pay the full costs of the required infrastructure which will be subsidised by higher rates from the older, established suburbs.

The economic and social consequences of the planned shift in the rates burden seems to have been ignored – I have not been able to find any evidence of it in the Council’s public deliberations.

mark said...

Rodney Rural is 7M better off! - and they just had a couple paras saying they talked to experts and came up with 80% of normal residential!

My view is that for the first few years no one should pay less than they did for same servcies.

Also rural has extra costs = greater roading km per property - greater commercial truck use than normal residential, greater cost of providing outlying services - all were already factored into existing Rodney costs structures.

So what's changed? just the ability to get 1.3m to cross subsidise!

Even if 80% was right - why not move to it slowly, as Council do with reducing the commercial differential.

Chris Fletcher said...

Thank you for highlighting the unfair decision of the Auckland Council on rating and the LTP. This council decision in the draft plan has the ability to drive many long term residents out of their homes. The assumption that the property value reflects household income is a nonsense and sadly many older residents on fixed incomes are going to be forced from their homes in the central, northern and eastern suburbs where property valuations have increased. The majority of the council appears disinterested in their plight. Good on you for bringing advocacy to this.

Chris Fletcher