Are rural rates changing land use?

Rural News

Rates bill turns us into council serfs says farming couple

20th Apr 11, 4:21pm by Tony Chaston

This Federated Farmers hardy annual - about exorbitant rates in rural areas close to the cities - appears to be getting out of hand, based on the figures supplied in this article

High rates encourage subdivision to livestyle blocks around any major towns and lose good productive farm land to horses and pets. NZ's productive land is shrinking with the high country retired to the conservation estate, land being removed to protect waterways on intensive agricultural land and now these rate increases encouraging urban drift.

The country needs every bit of productive land to earn it's way out of the mess it's borrowed itself into, and these rate increases should be fought with vigour.

Can you share similar horrific rates stories on your rural land?

North Rodney deer farmers Betty and Eric Terzaghi say that in 20 years the rates bill on their 45ha retirement farm has reached the point where "we have become serfs in the service of the council".

Rates ballooned to the point where the net profit on raising 60 to 100 deer a year for export went directly to the council. They said they paid four to five more in rates in rural Matakana than others in urban Auckland reports The NZ Herald.

They opposed a rating system based on capital value, including a property's subdivision value, whether or not the property had development consent. Treating the rural sector as Auckland's cash cow would not deliver Mayor Len Brown's Auckland Plan aim, they said.

The plan aims to "recognise and strongly support the role of rural areas, including productive farmland, in defining the character and contribution of rural areas to creating the world's most liveable city."

The Auckland Council proposes to standardise the 65 rates remission and postponement policies which it inherited from the merger of eight councils and which would cost $675,000 in the next two years.

Warkworth registered valuer Guy Scholefield said that around the coastal margins, numerous farmers were subsistence farming on the most appealing farmland imaginable. "The view does not provide any income."

He gave an example of a 125ha coastal property, with a rateable land value of $5.4 million. It paid $17,500 annual rates, or 88 per cent of gross farm income. Rates took $14.50 per stock unit, compared with an inland farm carrying the same 1,200 stock units, which paid $2.50 to $5.

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6 Comments

by keriwin | 20th Apr 11, 8:21pm 1303287704

When are we going to get rid of this crazy rates system and start taxing individuals?

by Casual Observer | 20th Apr 11, 9:03pm 1303290188

An interesting situation arose locally recently that resulted in a petition from the local ward to move from Whakatane Council to Kawerau Council. The area includes the small township of Edgecumbe.

Since the 1987 earthquake which resulted in severe damage, the Edgecumbe sewerage system has failed whenever there is moderate rain, resulting in raw sewerage entering the Rangitaiki River. This has been going on for 24YEARS!

It has now come to light that Whakatane District Council (WDC) receives a surplus of $2.4million each year from rates paid by those in the Rangitaiki Ward, which is mainly rural. Why was this surplus not directed to fixing the sewerage system in Edgecumbe (never being charged in 24years by the Bay of Plenty Regional Council for breach of consent may have something to do with it).

Now that the Electoral commission is due to make a decision on which council the ward will come under, WDC have now started to fix the Edgecumbe sewerage system.

This typifies the sort of situation that can give rise to feelings of injustice in rural communities in relation to rates. We pay heaps but at times receive little in return. Most farmers are aware that there is some cross subsidisation and that it is usually rural subsidising urban.

Rates for farmers (high value rural land) here are going up 13%, 5% for lifestyle properties, and reducing for low value rural properties by 7%. This is where it is farcical. All these properties can be side by side, therefore the roads and waste management services etc are all used the same by the various ratepayer groups, but the contribution they make to the community is substantially different. Rates should be held to increase no more than cost of living increases, with the ability for user charges for specific spending like new community water schemes. Money earned within a community should be used within the community. WDC have a 20% surplus from the rates paid by the Rangitaiki Ward, yet farmers are being hit with a 13% increase for no additional services supplied.

We are also Southland District Council ratepayers. As from 1 June, the Council have offered a service to rural ratepayers to have a wheelie bin collection - not for recyclables, as there is a recyling station in the community. Cost will be approx $270pa. Collection every two weeks. Problem - we have to take the bins 3kms down the road to the recycling centre for the Council to empty them. They have tp be there by 7am. Imagine trying to do that in Spring when you are up to your eyeballs calving/lambing and getting kids off to school. It is a no goer for our farm employees. BUT we do have an alternative - a company will drop a 3.5t skip (lidded) on the farm for house (not recyclables) AND farm waste and will empty it on demand. Cost $20 per month and around $70 per empty. So far this latter system is working really well and though slightly dearer than the Council system, it is money well spent.

Our rates are over $10,000 per year. The road the farm is on is gravel and at times has been in a downright dangerous condition due to lack of maintenance.The Council now contracts the road maintenance out to Fulton Hogan. Have to say that since they have taken over they respond quickly to calls re the road needing grading - the council never did. If I was paying $10,000 a year in rates in town I would at least get a weekly waste collection at the roadside, a footpath, street lighting and a tar sealed road. Do I feel I get good services for my $10,000 in our rural area - no. Would I be happy paying $5000 a year - yes.

by By the Numbers | 21st Apr 11, 4:03pm 1303358628

Something does not quite compute with the $5.4m farm and rates at $17.5k being used as an example of local body rates changing land use.

The farm value, as a business would include stock etc. The GST exclusive return on capital, at a gross income of some $19.8k - net of GST at some $16.9k - in the business valued well in excess of $5.4m, is less than 0.3%. The annual rates as a percentage of the business value, is less than 0.3%. This is the most imporatnt factor at play in influerncing land use? Seems that the rates are too small a tail to wagg this much bigger hairy dog.

Hpwever, I understand such thinking is celebrated by the awarding of mugs.

If rates are to be based on stock unitts, can I be included. I have a vacant section capable of feeding one sheep. My rates, at some $2.5k per annum, would then be $2.500 per stock unit.. I am not keen to pay more than that. by subsidising those who only have to pay a few $ per stock unit. I dont even get the GST and tax back.

Perhaps I should ask the for a free mug as well. By the numbers, I appear to be well qualified.

by Wolly | 22nd Apr 11, 7:39am 1303414761

There are two aspects to this matter...the first is the distribution of liability..rural v urban...and the second can be called the "council cash cow concept"..

What is happening now across the country reflects the refusal by councils to pull in their spending plans...the building bubble has finished but the staff taken on by councils to cope with that splurge and surge, remain in place. Council staff are encouraged to find and develop new sources of cash. The rural sector is being painted by Key and Co as being flush with dosh...loaded....ripe for the picking in the eyes of councils.

None of this can really be changed at the regional level through an election...it has to happen in Parliament. Councils have to be bashed into tighter rules over rates and the game of 'milking the suckers' must come to a bloody end.

Get the message Mr English!

by steven | 22nd Apr 11, 8:30am 1303417839

"council cash cow concept",

The few farmers Ive talked with in Marlborough tell me they have to grow grapes becasue its the only way to meet the council rates except of course the returns on grapes have collapsed.......so yes it seems probable at least one council has based its income on a mono-culture which now might implode.....brains they dont have.

regards

by Wolly | 22nd Apr 11, 8:49am 1303418954

Oh yeah that's the Marlborough Council for you....the game was to designate farmland as grapeland and rate it accordingly...now the rates are fixed and the boom times have turned to shite. They see the rural community as fair game. The local mp is National...and blind as a bat when it comes to the rate rort...he don't wanna know Joe.

Part of the problem stems from the place being flood prone, so massive flood protection costs....then there was the red tape over water quality from central govt...so more costs....then the red tape over sewage 'management'..so more costs....but did we need a multi story carpark...no we bloody did not. The expectation is the council will end up filling the carpark with council vehicles.

The truth is councils are just smaller versions of central govt...hell bent on growing in size until they swamp the local economy. Fiscal deficits do not exist because revenue can be increased at the stroke of a pen...the rate rise! And councils are by their nature deeply into Keynesian economics in their regions...hence the rush to get community building programmes going...gotta create the jobs...gotta hang on to the residents...must not shrink....