THE PRESS WEDNESDAY, MAY 29, 1985. Rates reflect restraint

Press, 29 May 1985, Page 18

THE PRESS WEDNESDAY, MAY 29, 1985. Rates reflect restraint

Christchurch City ratepayers are entitled to be relieved at the moderate level of increase in the rate levy this year. The 9.5 per cent increase in the combined rate levy for the City Council and ad hoc bodies is greater than the average increase in wages for most people from the last wage round; but it is significantly less than the probable rate of inflation for the year. Many local bodies in the country have been unable to keep this year’s rate increase in single figures. Not a few are closer to 20 per cent than 10 per cent. The restrained rise decided on by the Christchurch City Council is hardly cause for loud grumblings of discontent The simple figure does not tell the whole story. The five-yearly property revaluations completed last year will have a big effect on the demands made of individual ratepayers. Extreme examples supplied by the City Treasurer, Mr R. A. Lineham, show that the rate bill for some could increase by more than 57 per cent, while others will enjoy a reduction in their rates of almost 25 per cent. These variations are quite outside the control of the council. Ratepayers who face such a hefty and sudden increase in their rate demands must take what comfort they can from the knowledge that the pain would have been worse, but for the council’s restraint. The council trimmed more than $2 million from the draft budget before settling on the final rate requirement. Some of the work that this figure represents has been delayed; it will have to be done — and paid for — in future years. Some of the increase in the council’s $177 million budget this year is to catch up on work that had been deferred during the last three years of minimal rate increase. The work could

be deferred no longer. Even with this year’s increase, rates in Christchurch City have increased by an average of less than 4 per cent a year since 1982 — well below the rate of inflation. The council has had to be mindful, too, of the combined effect of rapidly rising inflation, and of interest rates on the $4O million public debt it has outstanding. The average Christchurch household is being asked to pay a little less than $lO a week in rates. When measured against the services and facilities provided, the sum gives value for money. It is important to remember that income from rates accounts for less than onefifth of the council’s annual spending. To meet the expectations of ratepayers, the council relies heavily on income from the sale of electricity, from other trading and fees, and Government grants and subsidies. Efficiency in the council’s trading departments results in lower demands on ratepayers without having to cut out maintenance or capital work. The introduction of the goods and services tax no later than April next year, and its application to local body rates, will make every saving on rates doubly important. Under a GST of 10 per cent — apparently the lowest figure being contemplated — an average ratepayer in Christchurch would face an increase in this year’s rate demand of more than twice what is being sought. It must be remembered that under a GST, the council’s spending will have been inflated already by the application of the tax elsewhere in the economy. The double jeopardy of ratepayers in having to meet a further GST payment on their rates — a tax on tax — clearly illustrates the flaw in applying the GST to local body rates.