Friday, April 12, 2024

Councils reach for farmers’ back pockets

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Federated Farmers concerned councils will reach for farmers’ back pockets.
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Councils across the country are struggling to balance their budgets and Federated Farmers are concerned they may reach for farmers’ back pockets to cover the shortfall.  

Analysis by Local Government NZ (LGNZ) shows up to two-thirds of councils are proposing rates increases higher than 14% later this year.  

Alarmingly, almost one in five councils are proposing an increase of more than 20%.  

Federated Farmers local government spokesperson Sandra Faulkner says it’s shaping up to be an unprecedented raid on ratepayers’ wallets. 

“We’ve never seen anything like this before, where most councils are looking at double-digit rate rises,” she says. 

“Canterbury is looking at a 24.2% increase, Otago 21.3%, Greater Wellington 19.8%, Taranaki 16.3%, and Horizons 12.9%.  

“Those kinds of increases are really going to hurt farming families already struggling with lower commodity prices and significantly increased costs.” 

Farmers are going to baulk when they see their rates bill this year, particularly when many are already paying tens of thousands of dollars, Faulkner says. 

“It’s not like ratepayers are going to be getting anything more for their money either. For most, this will simply be a case of paying more and hoping their infrastructure doesn’t get worse.  

“What’s most concerning is there seems to be no end in sight. This isn’t a one-off increase; a lot of these councils are looking at several years of big rate increases back-to-back”. 

Faulkner, a former Gisborne district councillor, has some sympathy for councils who need to cover extra roading and infrastructure repair costs after last year’s cyclones.  

She’s among those who say our model of local government funding is broken, and the sector continues to deal with too many “unfunded mandates” from successive central governments. 

“There’s more work and responsibilities being pushed down onto local councils, but little or no extra tax contributions to help cover the cost – so it falls on the ratepayer to pick up the bill.” 

Federated Farmers accept that some cost increases are unavoidable but argue councils should be focusing on core services instead of spending up large on ‘nice-to-haves’.  

Whakatane is another district facing a large rates increase, with the council proposing an average jump of 17.1% this year, with 11% and 9.3% the following years.  

Federated Farmers Bay of Plenty president Brent Mountfort says farmers will be quite rightly questioning the value they get from their council. 

“Rural residents are paying 59% of the district’s rates, but farmers don’t get a hell of a lot for it. They’d be lucky if they had their road graded two or three times a year,” he says 

“Given the distance we live from town, we just don’t get the same use of things like libraries, swimming pools, or street lighting. 

“A lot of rural residents won’t even have access to things like rubbish collection, town supply water, or wastewater treatment – but we still get the bill in the mail each year.  

“You have to wonder, is this really the fairest way for the council to share the rates burden across our community?” 

One solution proposed by Federated Farmers is greater use of the uniform annual general charge (UAGC).  

This levy is an acknowledgement that it is people, not property, who benefit from council services like libraries, pools, halls and footpaths.  

It provides a valuable counterweight to ensure the rating burden is shared equitably across a community instead of falling on a smaller number of higher-value properties – like farms.  

Councils are allowed to have up to 30% come from UAGCs and other targeted charges, but most district and regional councils come nowhere close to that limit. 

This is because uniform charges tend to put a greater proportion of costs on urban ratepayers, who provide a bigger voter base for elected councillors. 

“It’s simple politics,” Mountford says.   

Whakātane District Council currently collects 24% of their rates revenue from a UAGC, but two of the three funding options they’re proposing would reduce that to 20% or 16%.   

This would put much more of the cost share on property-based general rates, which would mean even higher rates rises for farmers – 21% to 29% for dairy farmers, for example. 

The council says this approach better reflects people’s ability to pay, but Mountfort says that kind of thinking is a continuation of a mistaken and unfair assumption that plagues farmers. 

“Farms have a large land component, of course, but the value of a farm property has nothing to do with that farming family’s use of council services or their ability to pay a bigger bill.  

“I wonder whether elected councillors even know just how tough times are for many farmers this season? We’ve got low commodity prices, rampant inflation, and interest rates are really biting.  

“If the council are planning to reach into my back pocket to cover their own financial shortfall, they may be disappointed to find how little spare change I actually have in there.” 

Federated Farmers, New Zealand’s leading independent rural advocacy organisation, has established a news and insights partnership with AgriHQ, the country’s leading rural publisher, to give the farmers of New Zealand a more informed, united and stronger voice. Feds news and commentary appears each week in its own section of the Farmers Weekly print edition and online.

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