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Rates Relief


Press Release to Rotorua Now: Reynold Macpherson, RLC Councillor
26 March 2020

The Rotorua Lakes Council continues to refuse residents and ratepayers any rates relief on the grounds that it wants to offer more equitable and targeted support during the coronavirus crisis.

The RLC’s track record on rates affordability shows that this claim is hypocrisy. Since 2013 the Council’s rates take has gone up by 33.5% while benefits and pensions have gone up 4.3%. The negative impacts have been greatest on the poor, mostly Maori, and the elderly. To deliver more equitable and targeted support will require a major revision of current financial policy.

Why is the RLC so resistant to rates relief? Many councils around New Zealand have announced rates freezes and other savings to help their people get through the health and economic crises. One reason is that Rotorua’s economy had a much-reduced capacity to support the RLC’s grandiose Vision 2030 long before Covid-19 struck. Infometrics reported that Rotorua’s growth in GDP was only 1.6% for the year to December 2019, significantly below Council’s target of exceeding New Zealand’s growth (2.3%) and even lower than the CPI (1.9%). They don’t want to freeze rates because they can’t afford it and do all the things they want to. The contrary truth is that we can no longer afford this Council.

Another possible reason for the resistance to announcing rates relief is that the RLC’s leaders could be expecting another fist-full of dollars from the sky. The cash bombs from the PGF (requiring matching debt) and the exclusive meetings with the PM and the Minister of Finance could have seduced the Mayor’s power bloc into believing that there will be bail-out packages for innumerate councils in the $12.1 billion promised. There is no evidence of local government packages. Ratepayers remain fully exposed to the twin dangers of this cargo-cult mentality; rates rises and indebtedness.

The central government has frozen most evictions for three months and frozen rents and mortgages for six months. Ratepayers have been left exposed to the whims of local councils over potential rates rises. With the Rotorua District economically compromised by widespread layoffs in forestry and tourism, ratepayers are now asking whether ‘we are all in this crisis together’. Without a rates freeze they will have to carry all of the risk to revenues.

Instead, the RLC’s financial policy discussions to date for the coming Annual Plan have focussed mostly on how to reallocate even higher rates across groups of properties with different capital values in order to make them ‘more equitable’. Not on how to increase revenues other than rates and cut non-essential capex and opex. The notional budget for the Annual Plan is full of sacred cows that weak leadership won’t challenge and that are driving up unrealistic rates rises.

The RLC’s promise to provide more equitable and targeted support is insincere because it lacks the delivery tools. It does not have the information it needs to target support equitably to individuals, groups, businesses and sectors. Only national government agencies hold such data and can mount fine-grained interventions. Punching the air over the need to better target support while lacking the administrative capacity to do so, and denying the need for local rates relief, is little more than political posturing that continues to terrify one stakeholder group; ratepayers.

The only upside for ratepayers is that Covid-19 has stopped Council meetings during the lockdown with executive delegations going to the Chief Executive. Since the delegations do not include the power to set a rate, rates have effectively been frozen until Council reconvenes. In the interim, all ratepayers can hope is for an outbreak of humanity on Council.

In sum, the signs are that RLC is not going to let the health and economic crisis stop them in their tracks. For them, its business as usual.

Our PM is saying “Be Kind” throughout Covid-19. Is the Council’s message “Be ruthless?”

Reynold Macpherson