Kiwifruit growers are grappling with punitive rate hikes of as much as 50% after a recent High Court ruling – in districts where urban ratepayers have faced only single-digit increases.
The court decision means kiwifruit growers with SunGold licences have seen their orchard valuation increase by the licence’s value, in most cases about $800,000 a hectare.
Previous rating valuations had not distinguished between conventional Green and SunGold vines as ratable “improvements”.
This month a Court of Appeal ruling upheld an earlier High Court decision ruling in favour of Gisborne District Council, which applied the increase to Gisborne grower Tim Tietjen. Tietjen and fellow growers now face the prospect of significant rates increases, thanks to the licence’s inclusion in valuations.
In his case that is a lift from $4000 a year to $8000 a year on his 5.8ha orchard, which includes 3.1ha of SunGold fruit.
Ōpōtiki kiwifruit grower Adrian Gault has already seen the Gisborne decision flow into his rates valuation for orchards and orchard interests across other kiwifruit-growing council districts of Western Bay of Plenty, Ōpōtiki and Whakatāne.
Three years ago, he experienced a 48% rates rise on his Ōpōtiki orchard and has just received another 44% increase on the block this year.
“My discussion with QV [the valuation company] indicates they have been instructed to include SunGold in the valuation.”
In a statement to Farmers Weekly, QV confirmed the last valuation of rates in Western Bay of Plenty, the main kiwifruit-growing region, was completed in 2019 and did not include SunGold licences.
QV said that their inclusion in this revaluation has meant a significant increase in rating value for Gold Kiwifruit growers. Horticultural kiwifruit categories have increased by 54.2% in capital value and 47.2% in land value, on average over the whole of Western Bay of Plenty.
“This is highest increase of rural categories but a similar increase to the urban growth observed,” QV said.
However, rates increases in Western Bay of Plenty, Ōpōtiki, Whakatāne and Tairāwhiti have averaged only 9%, against the 50% surges growers are being hit with.
Rates on Gault’s 4.8ha Ōpōtiki orchard have gone from $8000 a year six years ago to $12,000 a year over the past three, and are poised to soar to $18,000 a year this year.
“Over the last 10 years the increase amounts to 20% a year, with no additional services provided. It is robbery.
“When they got their valuations, a lot of growers probably did not connect the dots on what the increased value meant, that it’s used for rating purposes.”
With 10 years of council experience behind him, Gault maintains councils have other tools like targeted charges and uniform annual payments to moderate rates charges to commercial growers and farmers, many who benefit least from council services.
However, he said councillors are choosing not to use them, opting instead for a less transparent and outwardly simpler general rate.
He said the adoption of SunGold licences into rating values is a money-grab on operators in districts where councils use rating valuation to determine supposed ability to pay.
“This comes despite us losing $400,000 on our Green crop across 8ha this season.”
The decision also has other horticultural sectors concerned over what the decision will mean for their licensed fruit varieties.
Pipfruit New Zealand grower director Evan Heywood of Nelson said the decision sets a precedent for apple growers who purchase licences to grow higher value apples including Envy and Rocket. These are often valued at about $100,000 a hectare.
“I think this may be the reality now and if so, it has big implications for growers.”
He noted licence values tend to fluctuate, raising the question about how much of a rates reduction would occur if the value dropped.
Federated Farmers rates expert Nigel Billings noted that a disparity already exists between pine trees on forestry land that are not included in rating valuations, compared to perennial crops like kiwifruit, grapes, and apples, which are.
But Billings said the decision to target SunGold licences appears particularly punitive and only adds to existing imbalances within council rating structures.
“In town you do not distinguish between what two commercial properties are selling and earning when it comes to rates. A SunGold licence is not an improvement to the land, it is a licence whose value is theoretical.”
At the High Court hearing kiwifruit growers also argued that a rating based on a SunGold licence’s value is effectively an additional tax, when any additional earnings gained from the licence should be paid as income tax.
