In this article, Andrew Young discusses recent events in the Auckland region that have highlighted local body rates and raised the question what can be done by a ratepayer to object to the rates levied. The discussion and publicity around the issue has singularly lacked in any consideration of the rating process or any constructive suggestions as to how the public can have a say.
Local authorities levy rates on property in order to fund their activities and the services they provide. Rates provide most of the income of a local body, and provide the money to pay for essential services. The power to levy rates is given to local authorities by the Local Government (Rating) Act 2002 and the procedures followed are governed by that Act and by the Local Government Act 2002. The rates set must relate to a financial year or part of a financial year and must be set in accordance with the relevant provisions of the local authority’s annual plan for that financial year. The procedure for setting rates thus starts a considerable time before the actual resolution of the local authority setting the rate.
The annual plan procedure is provided for in the Local Government Act. This requires that an annual plan be prepared and adopted for each financial year, and in adopting the annual plan the special consultative procedure set out in the Act must be used. The effect of this is that the local authority must prepare a statement of what works and services it proposes, and how these are paid for.
In the case of the Auckland Regional Council, an annual plan was prepared and publicly notified, and submissions called for. The plan was available at the Council’s service centres and probably at public libraries and elsewhere. It included details of the works which were proposed, the monies required, and how land was to be rated, to fund the proposals. This information was therefore available and open for public submission some considerable time before the rates were actually set. One would expect that ratepayers’ organisations and territorial local authorities in the region would have been aware of the annual plan, and therefore would have been aware of the proposals.
Until the passing of the 2002 statute, territorial authorities were obliged to collect rates on behalf of the regional authority under legislation passed in 1989 with the local body reorganisation which took place at that time. The new Act released city and district councils from that obligation. If one territorial council declined to collect or the cost of collection could not be agreed, then the regional council would need to set up a system to collect rates and it would probably do so for the whole region. It would also need to use the same rating base for the region although the city and district councils within that region used a different basis for calculating rates. In part, the change of rating base may have caused greater variation in individual rates for this particular rating year. While these changes would have been apparent from a reading of the annual plan put out by the regional council, in reality, few members of the public would know to actually check the position.
It is likely that very few of the public are aware that the time to make submissions on the rates proposed for their area is by checking the annual plan and then making a submission to the local authority. The media publicity in respect of the Auckland situation has been lacking in any constructive suggestions as to how this should be done, or as to what can be done in future years.
The question arises as to what can be done now by the various pressure groups who are claiming that they should not pay rates, and what are the consequences of not paying rates levied on a property. The time for making submissions and endeavouring to change the rates to be levied has already passed. The annual plan was published, submissions sought and considered, and the rates were then set by resolution of Council in the manner provided in the Local Government (Rating) Act. They now have very limited power to alter or reduce rates. There is no provision in the legislation for review of the rates after that time. What there is provision for, is remission and postponement of rates in certain circumstances.
If the relief sought is by either remission of rates or postponement, then again it is necessary to look at the Council’s annual plan which sets out the policy for remission and postponement of rates - ie rates relief in individual cases. The Council has power only to remit or postpone rates if it is in accordance with that policy. Worthwhile relief is now available to those on low incomes (including almost all those mainly reliant on New Zealand Superannuation) under the provisions of the Rates Rebate Act 1973 (as amended in 2006).
The procedure laid down for setting local body rates is designed to give a transparent process as to what works are proposed, how those works are to be funded, how the monies are to be raised and, where these are to be met by rates, what that rate is likely to be. This is all set out in the annual plan so that residents can make submissions to their local authority on it. Unfortunately, the other side of the consultative process is that once the process has been completed the decisions made are final. In this case the rates are set and are recoverable by the local authority. Those residents who decide to protest by not paying rates in turn face the penalties provided for in the legislation. Rates remain as a charge against the property, and can be recovered not just from the owner of the land but also from any person or organisation holding a mortgage over that land.
In short, the time for those protesting to have made an issue of the rates which were to be set was when they had the chance to make submissions to the annual plan. Once the rates are set, they are recoverable and the local authority has very little, if any, discretion in respect of them.