OPINION: Today we should talk about councils and we should do that for a few reasons.
Firstly, the front page of the New Zealand Herald screams about “bombshell” new property valuations, which is, of course, complete hyperbole because anybody who’s followed the Auckland property market in the last couple of years will know that as sale prices have exploded, they must therefore be valuable, and therefore the council valuations must be considerably higher than the previous valuation four years ago.
That means of course that Auckland Council can increase the property tax - the rates - on that property. So Aucklanders, not this year, but probably next should brace themselves for a hike in rates based on having a more valuable house. It’s not the only factor in the rates charged but it’s a significant one.
The process sucks, but sadly it is the way the system works.
Where I live in Tauranga, the appointed people who run this city in the absence of a council, are about to sting the property owners with what I think is an absolutely outrageous increase in rates - not just this year but for the next ten years. The place has unaffordable housing now, but what will happen is that it will become even more unaffordable because the rates will be such a burden on many households.
So have you been following what’s going on at your council as they set out on their Long Term Plans? Do you realise how much it’s going to cost you?
I went to a meeting of my local ratepayers' association last night, just because I wanted to find out how much more I’ll have to pay to the Tauranga City Council in the next few years - if I can afford to keep on living here.
So the four commissioners - including former National Party Cabinet Minister Anne Tolley, who is the chair - presented to this ratepayers meeting, and there were about a hundred people there, and the news was extraordinary. The city-wide rates requirement increase is 22 percent. Let that sink in.
Now some ratepayers will pay less and some will pay higher, but the official council pamphlet that I picked up at the meeting has that number written large. In these times of inflation running at less than two percent, should any organisation be allowed to put its prices up by 22 percent? Well, out in the competitive market place they could, and they would see how consumers react. But a council is a monopoly, and increasing its charges by 22 percent in these times I believe is just scandalous.
And it’s not as if rates haven’t been running well ahead of inflation for the last ten years anyway. You can go on the council website and find out your likely rates increase this year, but also what you’ve paid for the last 25 years. I was generous and took it back ten years, which is about the time I started living in the city, albeit on a part-time basis. Since 2011 the rates on my current property, and I only moved in three years ago, but since 2011 the rates have increased by 102 percent. Yep, they’ve doubled in the last ten years! And the forecast is that they will increase by 140 percent in the next ten years.
Is there any other product, any other service, particularly a monopoly which has gouged such price rises out of its consumers over that time?
And this year, according to the council website, my rates rise will be a lazy little 16.69 percent, oh and on top of that the charge for water increases from 2.23 a cubic metre to 2.90. Is this the hidden, quiet scandal about the cost of living in New Zealand?
The central government doesn’t dare put up income tax rates or introduce capital gains taxes or wealth taxes. They know that if they did that they would be booted out. It is politically unacceptable. So they leave the dirty work to the local councils, and then when a local council itself gets booted, as the central government did in Tauranga earlier this year, the government-appointed commissioners come in and sock the locals with these unbelievable rates rises.
You might think this is a local issue. In the first instance, it probably is. But how often is this scenario going to be repeated around the country?
Listen to Peter Williams every weekday morning from 9am on Magic Talk.