Cost of living concerns see business rate relief scrapped

Thursday, 7 December 2023

Wellington ratepayers have dodged a $160 addition to their bill, with the city council voting down a proposal to charge businesses less.

It won’t be enough to avoid the “unprecedented” rates rise councillors are forecasting - 15% to 20% - but the average household’s rates will be 4% lower than if the proposal had gone ahead.

The plan to lower the share of rates paid by businesses was backed by the Chamber of Commerce and was recommended to the meeting by Wellington City Council staff. Commercial ratepayers would have received a 5.5% drop in their share of rates, subsidised by a 4% rise for households.

Mayor Tory Whanau and a majority of councillors shot down the idea on Thursday over concerns about whether it was affordable for residents.

The commercial differential ‒ where businesses pay 3.7 times the standard rate ‒ will remain as is, instead of dropping to 3.25.

“While it would be good to decrease rates for our commercial sectors, I couldn’t hand on heart allow the cost to be put on to households,” Whanau said.

The call confirmed Wellington had “some of the least business-friendly councillors in the country”, Chamber of Commerce chief executive Simon Arcus later said.

The day before the meeting, Whanau had attended the speech from the throne by Prime Minister Christopher Luxon. The heavy business focus signalled relief was on the way and the council could focus on supporting people, she said.

Councillor Ben McNulty agreed that the new Government seemed to be “extremely business-focused”, meaning the council could ease back.

He didn’t think his constituents would be happy with him voting for a “massive reduction for the supermarkets who have price gouged them during a cost of living crisis, paid for off the back of a $160 increase for all residents”.

Questions from Councillor Nureddin Abdurahman showed the plan would have saved the biggest 10 ratepayers in the city $1.1 million a year, with a much lower saving for small businesses.

“This is a wealth transfer from the bottom to the top, it’s not supporting small businesses,” he said.

Some councillors strongly supported the decrease for businesses, with Nicola Young saying businesses were not a “big ATM machine” for council.

“What are commercial ratepayers getting that there should be extra funding?” questioned Diane Calvert. No-one wanted to pay more rates but it was a question of fairness, she said.

It was one of the most difficult decisions Ray Chung said he had faced on council.

Tim Brown said the broader implications of the differential ‒ about whether it was appropriate to charge commercial ratepayers 44% of the city’s rates ‒ had been missed in the review.

“In Wellington, a great many businesses are struggling,” he said. He supported reducing the differential in order to send a clear message that the council wanted businesses to thrive, even if it meant transferring the cost on to residents.

Arcus, of the Chamber of Commerce, acknowledged it was a “difficult choice”, but said the move sent a “negative message” to businesses.

It would hit hospitality and retailers hard and was passing the cost on to already vulnerable businesses.

On Whanau’s comment about not wanting to pass on the cost to households, Arcus said the council had, albeit indirectly.

He said 87% of the cities businesses had five or fewer employees.

The council also voted to impose a new rating differential on vacant land in the central city. Around 60 properties with no consented use will pay five times the usual rate – in an attempt to make landbanking more expensive.

A vacant land rate has already been rolled out by Christchurch City Council.

Tony Randle strongly opposed the change saying it was “fraught with problems” and likely to end up in court. He believed it would encourage property owners to develop quickly rather than making plans for the high-density housing the council wanted to encourage.

A majority of councillors saw it as a good way to incentivise development.

Deputy mayor Laurie Foon would be pushing for the vacant land rate to expand into Newtown as well, where derelict buildings were holding the area back.

“These are potential homes in a prime area also along Adelaide Rd, I would have liked to see this be a bit harder,” she said.

The council also decided to increasing the rates remission for low-income ratepayers from a maximum of $700 to $800, for ratepayers who have successfully applied for the NZ Government rates rebate.

– Additional reporting Gianina Schwanecke