Let's Cap Rates

My post the other day focused on capping rates. Here's how it could work.

Rates would be capped to inflation plus annual population change or no more than 5 per cent over any three year period. This cap could be over-ridden by the ratepayers in a poll commissioned for that purpose.

Polls are not a new thing. Sections 24-25 of the Local Government Act 1974 (repealed) allowed for polls to take place where districts (as they were then known) wanted to merge, abolish or even for the establishment of new districts. A procedure was set out in the Act.

The cap would not necessarily apply to such matters as emergencies, council debt service or perhaps to fund transport initiatives or to programs or services that assist senior and disabled citizens. And, rates collected in excess of those needed to fund council services within the cap could be divided two ways. The first half of the ‘excess’ would be placed in a ‘rainy day fund’ to meet council needs in times of contraction or emergency. The other half would be dedicated to rates relief.

Alternatives to Rates

[It is acknowledged that help for some of the following ideas and suggestions has come from www.NoMorerates.com].


The main alternative to rates as a form of council revenue has to be a residents levy, or as Margaret Thatcher named it, a poll tax. There is no reason why someone who owns land but does not use the services in the city in which the land is located should pay rates to the council in that city. Assistance for the levy would be available for those who need it. The tax would be set by local councils and would be capped (see above).

The second form of income for councils could be a local income tax which would be collected centrally via an increased GST and funded to councils on a per capita basis.

Other things that could be done to limit the impact of rates burdens are:

1. Remove GST from rates.
2. Central Government to fully fund any service required to be delivered by the Council that derives from parliament.
3. Business rates should be reduced immediately to come into line with residential rates.

And if you think I am barking up the wrong tree, check this Herald article out from today. I was suitably unimpressed with the way Labour handled the rates issue. Their inquiry was words but no action - not what was needed. But it looks like the report that is to come out of the inquiry is likely to confirm what Shore Can (and NoMoreRates who are not aligned to Shore Can) have thought for a long time: that 'money gouging' councils need to cut costs. And as the figures on the side-bar speech from Rodney Hide's speech spell out, the North Shore City Council is one of the worst.

A final way to slash costs might be to sell the North Harbour Stadium. The Council is guarantor under a loan by the trust which operates the stadium. From memory the loan cost $24 million in interest this year alone which the trust could not pay so we all paid it under our guarantee. The Council has confirmed it won't enforce the lender's liability to it as guarantor so that's $24 million down the toilet.

What would that do to your rates bill?

Shore Can believes serious consideration should be given to reducing the Council's liability under the Stadium loans. And if that means selling the Stadium then maybe that is what has to occur. But the people will be asked first.