northland chamber

Local Elections – It’s vitally important that you have your say.

In the Run up to the Local Body elections the Northland Chamber of Commerce has 20 questions to ask all candidates regarding their positions on various issues that directly affect Northland Business. These questions are available for viewing at the Northland Chamber website ( www.northchamber.co.nz )along with any answers received from candidates. The questions include candidate’s response on their vision, key infrastructural priorities, business friendly initiatives, debt position and their vision for the district over the next 5 years

Local government is a vitally important institution. It has an important role in improving the overall living standards of Northlanders. It is important however that local government remains efficient in undertaking its role and does not stray too far from its core business.

The core business of local authorities is to provide local public goods and services that cannot be better provided by the private sector or central government.

Circumstances where local government is better able to provide than central government are where local knowledge is required or the costs and benefits of government action accrue locally.

Core business comprises activities related to emergency management; roading and related activities; stormwater and wastewater systems; parks and reserves; and public health and safety such as the control of contagious diseases and food safety. The Northland Chamber also believes that Local Government is best positioned to undertake, plan and govern regional Economic Development efforts.

One topic the Northland Chamber has lobbied on for a number of years is the UNFAIR Differential Rating system

Too often councils endeavour to shift the burden of rates and the costs of services onto minority groups such as business. The business sector, for example, pays about half of the country’s total rates bill but consumes a relatively small proportion of council services. Businesses are often charged more under the dubious grounds that they benefit more from council services but this is seldom substantiated.

It is not in councils’ interests to shift the rates burden onto business. Businesses are the lifeblood of the local economy. They provide employment, pay wages, produce goods and services, and determine the depth of the rating base. If businesses are ill-treated by council rating policies (for example rating differentials) they either relocate, closedown or contract -or, in some rare cases where they can, simply pass the cost onto customers. If businesses flourish cities and districts prosper; if business is in recession the standard of living of the people suffers.

When councils distribute their funding burden across ratepayers two alternative principles are available to dictate how this best be done: the “benefits principle” - payment in proportion of consumption of services received; and “ability to pay” -payment according to how much the ratepayer can afford.

The Northland Chamber of Commerce believes that funding of local government activities needs to better reflect the benefits principle than is currently the case. That is, ratepayers should pay for the services they benefit from. Ability to pay should always be taken into account but as a rule income distribution is the responsibility of central government not local government. Unlike central government (with the information it has through income tax), local authorities have no information on the incomes of their residents so any decisions they make to assist people in this regard have the potential to be flawed.

Not only does putting the impost unduly on business often disregard where the benefit lies, it does not reflect ability to pay. For example, the rateable value of commercial and industrial property represents only 22% of Wellington city's total rateable value but the city collects 50% of its total rate from the commercial and industrial sector.

The most common way of shifting the rates burden on to business is by way of differential rates. These are commonly applied to rateable property used by business ratepayers so that they pay more than residential ratepayers per dollar of rateable land. Currently businesses pay 4.2 times as much as residential ratepayers in Wellington City; 3.1 times as much in Dunedin City; 2.8 times in Christchurch City 2.1 times in Auckland City and a staggering 5.0 times as much in Whangarei.

The main argument advanced by councils for the differential is that businesses benefit disproportionately from the services provided and so the higher rate is justified. We say councils should be required to substantiate the benefits before applying rating differentials to businesses. The higher rates are seldom justified.

Differentials should be used only to facilitate equitable distribution of rates such that ratepayers bear the cost of the services they benefit from. They should not be used as a revenue raising tool.

Please log on to the Northland Chamber of Commerce website for Business position on policies, the questions we forwarded to candidates and their answers.


The Northland Chamber of Commerce is the networking, education, advocacy and marketing group for Northland business, and is part of a nationwide network of 30 and a world-wide movement of 21,000 chambers. Subscription to the free fortnightly chamber e-news can be arranged on info@northchamber.co.nz. Enquiries to 09-4384771 or www.northchamber.co.nz, www.kaiparachamber.co.nz and www.farnorthchamber.co.nz
You can have a say on this by going to the Northland Chamber of Commerce Feedback website on www.northchamber.blogspot.com