TE AWAMUTU COURIER Printed on Mondays, Wednesdays, and Fridays FRIDAY, 20th FEBRUARY, 1948 RATING SYSTEMS

Te Awamutu Courier, Volume 76, Issue 6480, 20 February 1948, Page 4

TE AWAMUTU COURIER Printed on Mondays, Wednesdays, and Fridays FRIDAY, 20th FEBRUARY, 1948 RATING SYSTEMS

AT a time when Te Awamutu comprised mostly unoccupied land a change in the rating system from the basis of capital values was made, and the system of rating on unimproved values was adopted. The prevalent idea at that time was to make burdensome the holding of vacant land by either forcing some form of utilisation or the sub-division and sale of the larger properties. WJhether and to what extent the ideal has been realised can remain a matter of opinion, but it has certainly happened that considerable areas have passed into use and occupation. But whether this change results from normal phases of development or whether the rating system influenced the speed of sub-division is of little concern to-day. What does matter is that an entirely different situation prevails to demand attention and consideration. In the progress of time it has been learned that the vagaries of any rating system baffle those who would strive to better apportion responsibility while, at the same time, measuring the needs as they progressively arise. But it can be said that the principle of unimproved rating offers obvious defects. No sooner was the system instituted than many property-owners found relief in the re-classification or re-valu-ation of their properties, and by this means, at the very outset, the main purpose of those who had advocated the change was defeated. Bqt the biggest defect is that as development proceeds the valuation which forms the rating basis remains stabilised, so that it is the rate itself which must be steadily raised. The effect can be seen in the fact that what was originally a rate of a few pence in the pound has now risen to Is 5d in the pound. The reason lies in the valuations which, year by year, exempt the many thousands of pounds which represent the increase of values created in the normal spread of progressive development. The irony of such a situation is that these new valuations automatically create the demand for the raising of the rate. With the opening of every new street, for example, the basic or unimproved value remains practically unchanged while the demand is created for all of the amenities and services which the borough must provide in that street; and it cannot be localised to the street itself—-water supply, sewerage services, and other general installations become over-loaded and unequal to the demand until the cumulative effect of it all registers in a demand for considerable loan expenditures which can only register themselves in a steadily* mounting rate. So it happens that instead of the valuations moving in sympathy with actual development., the area as a whole remairis on a pegged or static valuation against which a higher and still higher rate must be levied. In its incidence a rate so levied becomes unequal and in many ways unjust to the individual ratepayer, and, in its general application, it reaches a point when it can so handicap administration as to retard progress. WTiether and to what degree a servicing change could replace a general rating system for some of the community services might offer a solution in limited directions, but it would leave untouched the general spread of an equitable rating responsibility. A local authority has no alternative to a rating security against its loan commitments, and although many pledged security rates are never levied it remains that the rating system is at the foundation of the whole structure of local body finance. All the more reason, then, that the method of rating should as nearly as possible spread evenly over the whole community after accounting the wider aspects of public finance and those many considerations which give rise to the provision of service and facility within the area as a whole. The law allows the choice of three systems of valuation and levy—the basis of unimproved values, or capital values, or annual values. In the review of all three methods it would be possible to reveal advantages and defects, for it is certain that no perfectly equitable

method is possible. But it should be possible, when regard is given to all known localised circumstances, to find in one or other system a greater measure of equity and a relatively smaller disparity as affects not only the individual ratepayer but the wider aspects of public welfare. What has happpened—and is still happening—in Te Awamutu is that the defect of the present system is a nominal, pate which is fast reaching a level at which progress will be retarded; Somewhat significant is the fact that the latest pronouncement of’’the..Government is for the retention of capital values in the assessment of local body contributions for hospital purposes. The rate is thus stabilised at a’.hfeximum of a half-penny in thei pbupd, but the amount of contribution will move in sympathy with the speed of improvements as registering in recorded capital values. If that could offer an example then Te Awamutu could very well consider whether its. future progress should register either against a stabilised valuation and a rising rate., or, alternatively, against a stabilised rate and a valuation moving in sympathy with normal progress and development.