When we adopted Tauranga City’s 2021-31 Long-term Plan (LTP) last year, the commissioners signalled that more work was needed to find a fairer way of sharing the cost of operating the city and investing in much-needed infrastructure improvements, particularly in our transport network.
We’re continuing that discussion this year through some proposed rating structure changes in our draft 2022/23 Annual Plan and we are looking for feedback from the business sector to help us decide how to proceed.
At the outset, we want to acknowledge the sector’s strong support for our work, despite the increases in commercial rates this year and the proposed increase for 2022/23.
In the current business environment, nobody welcomes increased costs, but the sector has clearly recognised that infrastructure investment in the city is long overdue, and that commercial ratepayers do need to help make that happen.
The draft annual plan we are consulting the community on this month proposes increases in both the commercial differential rate and the transport targeted rate. The latter change is supported by independent research which shows that business use of the transport network accounts for a little over half of all trips. However, the commercial and industrial sector currently contributes just 24% of our transport rates. We think that’s an anomaly that needs to be addressed, so that over time, commercial ratepayers contribute half of our transport rates.
Need to pay fair share of costs
Our LTP includes planned investments of around $2 billion in transport projects through to 2031, which will make it easier and safer to move around the city, so it’s important that those benefiting from transport investment are paying their fair share of the costs involved.
With regard to the commercial differential rate, Tauranga has been out-of-step with other metropolitan centres for many years. Last year, the differential increased to 1.6 (which means that a commercial ratepayer pays $1.60 in rates for every $1 a residential ratepayer pays, for a property of the same value).
The average commercial differential for all NZ metropolitan councils is 2.67 and our annual plan proposal will take us some way towards that, with the preferred option being to move to a 1.9 differential in 2022/23 and then 2.13 the year after that. Again, we think that is a fair reflection of the relative benefits commercial ratepayers gain from council services and activities.
The effect of those changes on rates bills will vary and you will find information on indicative rate increases in the consultation document for the draft annual plan and the draft 2021-31 LTP amendment, which is available on the council website now.
The commissioners are very much aware that the business sector’s acceptance of higher rates costs comes with an expectation that the projects they are paying for will be delivered effectively and provide the benefits they should. That will be a key focus for the commission and the council management team and we look forward to working with and for the business community to make Tauranga the great city we all want it to be.
