THE RATING QUESTION

Otago Daily Times, Issue 22346, 21 August 1934, Page 6

THE RATING QUESTION

UNIMPROVED VALUE SYSTEM

ADDRESS BY THE REV. E. T. COX

The news that a petition, signed by the requisite number of ratepayers, asking that a poll should be taken on the question of introducing the system of rating on unimproved values in the city, has evoked a fair amount of interest, and there was a fair attendance at the Mornington Methodist Sunday School Hall last night, when the Mayor (the Rev. E. T. Cox) gave an illuminating address on the subject, advocating the adoption of the proposal. Mr R. H. Steele occupied the chair. Mr Cox commenced with the observation that a discussion on the various principles of rating opened a wide field for academic argument, but in practice the argument was narrowed down to the relative advantages or disadvantages of two or, at most, three systems. These were rating on capital value, on annual value and on unimproved value. " For our purposes," said the speaker, " we are concerned with only the second and third systems. It is generally recognised that any system of rating adopted should conform to two wellestablished principles—payment for services received, and ability to pay. I propose to show that, judged bjr these two fundamental principles, rating on unimproved value is sound in equity as well as beneficial to the community."

The first argument met with in dealing with the principle of payment for services received, said the speaker, was contained in the question, " Why should the man who can afford to build a £SOOO house, and who uses more of the civic services (gas, lighting, heat, drainage, etc.) owing to the demands of the larger premises, only have to pay the same amount in rates as. his neighbour, who can only build a house costing £1000?" The defect in this reasoning was that it was based on a hypothetical case. In reality it seldom occurred. Houses costing £SOOO were built on areas where the unimproved value was approximately five'times that of the site of the usual £IOOO house. If the high-priced were not built on those areas specially* favoured for their locations or proximity to the central area of the city or for professional purposes, then they were almost invariably built on larger sections, and the plot of ground, with gardens, lawns, etc., was in the proportion of five to one so far as area and value were concerned. As an example, Mr Cox- said that the £IOOO house was usually built on one-eighth of an acre; the £ISOO house on one-quarter of an acre, the £2500 house on one-half an acre, and the £SOOO house on an acre or more. He was satisfied that this was true in the majority of cases. When houses of greater value were built on email sections, it was generally because of proximity to the city for professional purposes, and in such cases the unimproved value of the land was higher in proportion to the area than was the case further afield.

The principle of ability to pay called for some elaboration. It would be said that the man with the £SOOO house was better able to pay a higher rate than the man with the £IOOO house. He had just shown that, except in isolated cases, the same position would obtain under the unimproved value system. Extending the argument further, the speaker took up the question of the imposition of £20,000 on the central area to relieve the suburbs of that amount. Who,, he asked, was better able to pay than the big financial and industrial institutions, banks, insurance companies, shipping companies, 6tock and ' station agents, shops and professions located in the central area?

Originally, the cost of sections in the township of Dunedin was about £lO each. In Christchurch the central sites cost £25 each and the suburban sections £5 each. To-day one section in Central Christchurch (unimproved value) was valued at £40,000, while (suburban sites were seldom valued at more than £2OO. The reason for the difference was the different uses to which the areas had been put. It was the growth of population that had enhanced the value of the central area, and the owner reaped the benefit in higher rental and selling value, which he had not earned, but which the community had created and he alone enjoyed. In demanding from him, as rating on unimproved value would do, a larger share in the rating budget of the city, the citizens who had created his wealth, were demanding only a little of what he legitimately owed to the city. For the past quarter of a century the financial interests of the city had enriched themselves at the expense of the ordinary citizen, and the time had now come to call a halt. The change to the new system would result in a general reduction of rates on house properties of from £2 to £5 per year. Mr Cox went on to speak of the unemployment problem and the relief that could be afforded if a great deal of building were going on. He contended* that the adoption of the unimproved value system would assist in this direction. In Glasgow the principle was adopted of building new houses in new areas and the people went from the old houses to the new ones and the landlords of the former were forced to build or go without tenants. There were areas in Dunedin where the same thing should be done.

Going on to deal with the objections to the unimproved value system, Mr Cox said it was claimed that the rating question was a political matter and was advocated only by the Labour Party. New Zealand's greatest Prime Minister, Mr R. J. Seddon, who had done most of all men for this country, was not only an advocate of the system but he said that the Government should make it compulsory. It was not a political matter but a civic one. Nearly 70 per cent, of the cities and boroughs and 50 per cent, of the countries in New Zealand had adopted the system which had nothing to do with the Labour Party. The second objection was that the system put an additional burden on the central area. Apart from the communitycreated wealth the unimproved value of the city would not be more than £1,000,000, but its value was £4,000,000. The difference of £3,000,000, at 3J per cent, per annum would yield a little over £IOO,OOO and under the unimproved value system the ratepayers were asked to find only an additional £20.000 per annum.

The third objection raised was that the change would result in the creation of more slum areas, but that position was in the hands of the City Council. At present a man could build if he had 4000 square feet of land, which meant he could put 10 houses on one acre. It was time this was rectified. If the unimproved value system were adopted, it would tend to reduce the price of unoccupied sections which would encourage the building of more houses, and that would not tend to create slums, but rather the contrary. It was the greed of the landowners that caused tho appearance of slums when it was not prevented by the authorities. The present system put a premium on doing nothing as, if one built on one's land, one immediately had one's rates increased. Mr Cox went on the speak of the growth of the various provinces of New Zealand during the past 30 years. In 1901 Auckland province (including the citi' of Auckland) had a population of 204,000, Wellington had 146,000, Canterbury 144,000, and Otago 125,000, and iu 1932 the figures were: Auckland 517,000, "an increase of 150 per cent-: Wellington 312,000, an increase of 110

per cent.; Canterbury 229,000, an increase of 60 per cent., and Otago 154,000 an increase of only 24 per cent. Indeed, with the single exception of Westland, Otago's increase was the smallest of nil the provinces including Taranaki, Hawke's Bay, Southland, etc. Tho speaker dealt with the scenic and mineral resources of Otago and stated that Duncdin had made the mistake of investing its undoubted wealth in the north instead of in its own resources. In conclusion, he said that, under the unimproved value rating system, savings would be effected in the various suburbs as follows: —Mornington £3OOO per annum, North-East Valley £3OOO, Caversham £6OOO, South Dunedin £6OOO, and Anderson's Bay £4OOO. At the conclusion of the address various questions were put to the Mayor, who briefly replied to each questioner.