• Video: Review into how Hawke's Bay Regional Council sets rates will not change amount collected, says council

Video: Review into how Hawke's Bay Regional Council sets rates will not change amount collected, says council

The Hawke’s Bay Regional Council says that a review into how it sets rates will not change how much revenue the council makes from rates.

This comes after questions have been raised about the timing of the review, which has coincided with the holiday period with the closing date for feedback being this Sunday (28 January).

The Council’ rates take for 2023-24 is set to be $47m.

Former MP for Tukituki, Anna Lorck, describing herself as a regional council ratepayer, has called on the council to extend its consultation process and provide ratepayers with more information so people can make an informed submission. 

The HBRC is asking for feedback on how the general rate is funded - moving from land value to capital value for the general rate, as well as how the Regional Economic Development rate is allocated. The council also wants to know how the council should rate flood protection and drainage schemes; as well as passenger transport; Freshwater Science changes, including a new targeted rate; simplifying sustainable land management, biodiversity and biosecurity rates; and improvements and additions to rates remission and postponement policies.

However Lorck wants the council to explain how “its decision makers have determined that those with capital have more productive earning potential and provide real examples to back up this statement - compared to those who own land”.

“Not only has the council gone out at the worst possible time for public engagement- they’ve been extremely selective in who they communicate directly to and have  provide a very challenging formula for ratepayers to work out based on a current rates if they are a  ‘winners and losers’ under the switch.”

The former MP claimed that the Council is “being disingenuous in running a two-step consultation process which it says is to differentiate between a proposed rate switch to capital values (how it slices it) to how much rates it will need in the future (the size) of the pie”.

“It is obvious that behind this soft sell is a very calculated reason for doing it - first do the switch, get a bigger capital value for a rating base, then go out to the public with an increased  budget but make the percentage range of increase look less because its taking it from a bigger base.”

Lorck says the council has been selective in the information it has released publicly and then in choosing only to write to some ratepayers.

“Then to make it even harder on ratepayers it drops its announcement in the lead up to Christmas and expects the public to make submissions over the Christmas break and school holidays.”

However, the Chair of the HBRC, Hinewai Ormsby, has stood by the council’s process, claiming that some of the criticism had featured inaccurate numbers about a proposal to change how rates are assessed.

“Rates are the main form of revenue for local government across the country. Rates are an imperfect tool, but it is the revenue-gathering mechanism we are stuck with. Councils across the country have lobbied successive governments in Wellington about the need to have more than just rates as a way of paying for the services they provide.”“The total amount of rates collected is set through a council’s Long-Term Plan or Annual Plan. How the total amount of rates is split across different rate types – general rate, targeted rates – as well as fees and charges – is set through a council’s Revenue and Financing Policy. It is this policy that HBRC is currently consulting the community about. This policy will not change the total amount of revenue collected.”

Ormsby says that “so far, this complex process” has taken 18 months for HBRC with the interruption of the cyclone meaning this work was put on hold for several months.”

“Formal consultation has been running since 1 December and goes through until 28 January – giving eight weeks for ratepayers to make their views known. The Council will then consider all the submissions, hold hearings and make final decisions.”

“It is preferable that Council makes decisions on how the rates are set before we make decisions – again through consultation – on how much the total rate bill will be for the coming year. To do it any other way would confuses policy changes with cost and service changes. This Council’s guiding principles for the rates review have been to be clear and fair, simple and flexible.”

Ormsby also defended the Council’s proposal to change the basis of how it charges for the general rate.

“Nine of 10 of the other regional councils in New Zealand base the general rate on capital vale. This change to capital value has occurred progressively over time as councils review their policies.”“Capital value is seen to be more equitable, fairer and stable because those with more capital have more productive earning capacity, consume more resources and capital values fluctuate less than land value.  This is why the Rating Inquiry recommended it be the common system for all councils when it completed its work in 2007 and why the Government wrote it into the Auckland Council founding legislation in 2009.”

However, Lorck claims that the Council has a “very calculated reason’ for suggesting a change.

“First do the switch, get a bigger capital value for a rating base, then go out to the public with an increased  budget but make the percentage range of increase look less because its taking it from a bigger base.”

“This looks very much like part of a plan that is slowly but increasingly about to backfire on the council as the ratepayers start switching on to what this so call switch is really all about.”

Hawke’s Bay App asked the Council how many ratepayers, out of the 73,209 properties rated for 2023/24, had been sent letters informing them of the review.

“We sent letters to 1077 ratepayers, either in the post or by email, who were the most affected either by an increase and decrease within certain parameters. For those ratepayers with a proposed increase, the threshold was an increase of $1000 and 15% or more, and for those with a proposed decrease of $2,000 and 15% or more,” said a spokesperson.

“Many of the ratepayers own multiple properties but were only contacted once.  We sent letters to all water-take consent holders who pay freshwater science charges. We also sent letters to partners (Post Settlement Governance Entities and Taiwhenua) and key stakeholders (territorial local authorities and sector groups) encouraging them to use their networks to encourage participation.”

The spokesperson said the letters to ratepayers were sent in the week beginning 4 December, and emails on 8 December.

“We also sent letters and emails to sector groups between 13-18 December. These letters notified them of the review, why we’re doing it, invited feedback and explained how to access more information and make a submission.”

Submissions on the review close at 8pm on Sunday, 28 January. If you want to make your views known go to https://www.consultations.nz/hbrc/revenue-and-financing-policy