Addressing affordability

During the consultation Council explored options to make the plan more affordable for ratepayers by asking for feedback on Uniform Annual General Charges, borrowing and user-pays charges.

Uniform Annual General Charge

In this Long-Term Plan, Council proposed to pay for more activities from a Uniform Annual General Charge (UAGC). UAGC is a flat fee applied to all households, regardless of property size or location.

What we heard about UAGC

Do you support the changes we’re proposing to how we apply the Uniform Annual General Charge?

• Yes 33%
• No 22%
• Don’t know 45%.

More than 110 submitters made comments that UAGC should be for the benefit of people as opposed to property. Suggestions included increasing UAGC to $100 or more, or towards the 30 per cent cap set by the Local Government (Rating) Act 2002. Many thought that increasing UAGC could help spread rates across the region and address affordability concerns for the rural sector.

In contrast, about 80 submitters commented that UAGC was unfair and should be decreased or removed as it impacted low-income households.

Council’s decision

Council resolved to fund specific activities proposed in the Long-Term Plan from the Uniform Annual General Charge as outlined in the consultation document. This will mean a $36.71 charge per rateable property, plus the Annual Charge for Civil Defence of $14.42 (applies to all districts accept Waitaki). These charges make up about 9.7% of total rates revenue.

Borrowing

Borrowing can be used to spread the cost of an activity over several years. It is usually only applied when it is considered appropriate, such as when the benefit of the activity lasts the same time or longer than the repayment period.

What we heard about borrowing

Would you support the use of borrowing for operating expenditure to offset some of the first year rates?

• Yes 43%
• No 41%
• Don’t know 16%.

Submitters comments on borrowing were divided. Some were opposed to borrowing, but it was unclear if they were opposed to borrowing in general or borrowing for operational expenditure. Others supported borrowing to make the most of low interest rates and to enable Council to take urgent action for the environment.

Council’s decision

Council decided to borrow to reduce the total rates revenue increase in year one and fund work programmes that have intergenerational benefit. These include the work needed to develop the freshwater regulatory framework, Regional Coastal Environmental Plan and Regional Policy Statement, which have a ten-year life span. With a ten-year loan period, repayments will have an impact on rates for 13 years. Council notes that while interest rates are favourable today, there is uncertainty about future rates.

Fees and charges

The Fees and Charges Policy sets out costs for services across the organisation. The policy applies the user-pays principle that fair, actual and reasonable costs for services are fully recovered from those that benefit.

What we heard about fees and charges

Do you support the rationale and proposed changes in the draft Fees and Charges Policy?

• Yes 36%
• No 29%
• Don’t know 35%.

Submitters who supported the changes to Fees and Charges generally supported user-pays principles. While rural submitters supported the principles, they also expressed concerns about the increases to fees for consents and compliance monitoring alongside other rates increases. Some submitters also made the point that increasing fees, charges and rates together will impact on the ability of rural landowners to spend money on environmental projects and on-farm improvements.

About 20 submissions opposed the proposal to levy swing mooring owners with costs associated with abandoned boats, salvage or removal of wrecks.

Council’s decision

Council resolved to make all the changes to the Fees and Charges Policy that were proposed in the draft Long-Term Plan, while noting the opposition from rural ratepayers who supported the user-pays principle and swing mooring owners.

The following changes to fees and charges were approved by Council, including:

• increasing staff charge-out rates for compliance monitoring
• annual adjustments to staff charge-out rates in line with the Consumer Price Index
• changes to initial fees for resource consent applications and a new structure based on risk or complexity of a proposed activity
• annual charge on swing moorings for the recovery of wrecks and abandoned vessels
• a marine biosecurity monitoring fee for marine structures and vessels
• revised charges for holding commercial events in regional parks and forests.

Summary of changes

A summary of the changes made by Council to reduce total rates revenue needed in the first year of the plan and make it plan more affordable for ratepayers: