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25. 2. 98
STRATEGY AND RESOURCES COMMITTEE
10, 11, 12, 15 DECEMBER 1997
Meetings of the Strategy and Resources Committee
were held on 10, 11, 12 and 15 December 1997
| PRESENT: | Councillor David Close (Chairman), Councillors Oscar Alpers, Carole Evans, Pat Harrow, Margaret Murray, Denis O'Rourke and Ron Wright. |
| APOLOGIES: | Apologies for absence were received and accepted from the Mayor and Councillors Gordon Freeman, Ian Howell, Alister James and Garry Moore. |
| An apology for absence was received and accepted from Councillor Alpers for the 10 December meeting. |
The Committee reports that:
PART B - REPORTS FOR INFORMATION
1. SUBMISSIONS ON REVENUE STUDY CONSULTATION DOCUMENT
INTRODUCTION
The discussion document was released on 23 September 1997 and was available for public comment for a period of two months to 21 November 1997.
The discussion document attracted 393 submissions. Breakdown by sector of the submissions is as follows:
| Commercial | 13 |
| Residential | 295 |
| Rural | 85 |
| ---- | |
| 393 |
A series of public meetings was held during the period the booklet was open for submissions. Meetings for the general public were organised and publicised by Community Managers in each of the six Community Board areas, and were attended by members of the Revenue Study Working Party, Community Board members and staff.
The meetings consisted of showing the video prepared in conjunction with the booklet, addresses by elected members and/or staff, followed by open discussion.
In addition, a number of special meetings with staff were held at the request of interested organisations, including residents' or ratepayers' associations, and the National Council of Women. Private briefings and discussions were also organised with members of the farming and business communities.
Attendance at the public meetings ranged from sparse - two or three members of the public - to sixty plus. The largest meeting was at the Yaldhurst hall, where issues facing the rural sector were debated at length.
ANALYSIS OF SUBMISSIONS
Introduction
The submissions included responses to numerical questions in the response form at the end of the Your City Your Choice booklet, and responses to a questionnaire originated by Councillor Close. The areas addressed by the response form and the questionnaire were:
The Balance Between User Charges and Rates
Respondents were asked to indicate, for each of the 13 functions analysed in the booklet, whether the suggested level of user charges was far to high, slightly too high; or the balance with rates was about right; or whether funding from rates was slightly too high or far too high.
The following graph shows the responses summed across all 13 functions:
The top two bars (with horizontal hatching) show the percent of respondents who believe the level of rates suggested is too high. The centre (grey bar) shows the percentage who believe the suggested balance between rates and user charges is about right. The bottom two bars (with vertical hatching) show the percent who believe the level of user charges is too high.
It is important to note that the opinion on the mix of rates and user charges varies from service to service, as is shown by the following graph:
The graph has been ordered by support for increased user charges (ie, respondents who said the rates component of funding was too high or far too high). Greatest support for increased user charges occurs for civic venues, declining to much less support for increased user charges for parks, refuse collection and representation.
The majority, however, clearly support the Working Party's suggested split between rates and user charges, ie no increase in the overall level of user charges.
Benefit Accrued to Ratepayer Category
Respondents were asked to indicate how they thought benefits should be allocated for each of the 13 services - whether they supported the allocation of benefits made by the Working Party, or whether they wished to suggest a different spread.
The results summed for all 13 services are shown in the graph below. Overall, there is support for a further slight decrease to the residential sector, and a further slight increase for all other sectors.
The current level of rating is shown for comparison purposes.
The Uniform Annual Charge
Respondents were asked to indicate what they thought the uniform annual charge should be. Replies range from support for abolishing the uniform charge altogether, through to increasing the uniform charge to $750.00. The support for different options is shown in the graph below:
While there is support for abolishing the charge, and some support for an increase to between $180 and $250, the overwhelming majority support retaining the uniform charge at $100.
Councillor Close's Questionnaire
Councillor Close prepared a simplified questionnaire which was distributed at a number of public meetings. One hundred and thirteen responses were received in that form.
The questionnaire sought responses on a range of topics:
The results are shown in the following graph:
By-and-large, the majority of respondents supported the Working Party's suggestions. There was some ambivalence about the increase to the rural sector, and about the overall sharing of rates among sectors. There was strong support for retaining the uniform charge at $100; some support for decreasing it, and strong disagreement with increasing it. There was support for the suggested balance between rates and user charges, and for continuing to fund Libraries, Parks, Water, Sewerage and Land Drainage from rates. There was limited support for decreasing user charges, but strong opposition to their increase.
HEARING OF SUBMISSIONS
Public submissions on the above document were heard by the Committee on Wednesday 10 December, Thursday 11 December and on the morning of Friday 12 December 1997.
Community Boards
Community Board submissions were heard on the morning of 10 December. Three Boards, Fendalton/Waimairi, Riccarton/Wigram and Hagley/Ferrymead addressed the Committee in support of their submissions. The first two submissions focused largely on the effect of the proposed allocations on the rural community and sought a review of rural fire fighting and environmental allocations. Fendalton/Waimairi also sought a review of the libraries, museum, art gallery and roading allocations to the rural sector. The Riccarton/Wigram Board submitted that a distinction should be made between productive and non-productive (lifestyle) use of rural land and the additional costs the rural sector faces because of the lack of services such as water and sewer reticulation should be recognised.
Hagley/Ferrymead sought a review of the level of rates contribution to certain services and a corresponding increase in user charges. To offset the effect of the increased charges on low income earners, the Board proposed the introduction of discounted entry charges to Council facilities for holders of Community Services cards.
Residents' Associations/Institutions/Residential
Submissions from residents' associations, institutions and residential ratepayers were also heard on 10 December.
Three residents' groups addressed the Committee: Opawa St Martins Residents Association, Wigram Residents' Association and the Merivale Precinct Society. Opawa/St Martins strongly advocated the retention of status quo in terms of the allocation of charges, the Wigram group generally supported the status quo but with some relief for productive rural units. Merivale Precinct Society contended that the Council had failed to address the need to broaden the revenue funding base. Wider use of user charges to reduce demand was advocated, while concern was expressed about the Council continuing to provide goods and services for which there was no market failure and for not exploring alternatives to owning strategic assets. An increase in the uniform annual charge to soften the impact of capital value rating on higher value properties was also sought.
The Council of Social Services endorsed the outcome of the study and the reduction in residential rates on the grounds that rate increases impact very seriously on the disadvantaged members of the community whether they rent or own property.
Robyn Ussher spoke on behalf of the Friends of the Robert McDougall Art Gallery and sought a review of the apportionment of direct and general benefits for the Art Gallery.
The remainder of the day was devoted to hearing submissions from residential ratepayers, with eight submitters addressing the Committee. Generally, these submitters expressed their satisfaction with the Council's performance and current rating levels. One submitter suggested that wider application of user charges in roading and waste management areas would reduce pollution in the case of the former activity and landfill requirements in the case of the latter.
Rural
Rural ratepayers presented their submissions on the mornings of 11 and 12 December 1997. The Yaldhurst Rural Residents' Association, North Canterbury Federated Farmers and 18 rural ratepayers appeared in support of their submissions.
All submitters registered their strong objection to the funding allocations proposed by the working party and sought a review of the allocations for a number of outputs, including rural fire service, environmental planning, libraries, Art Gallery Museum, parks and beaches on the following grounds:
The majority of fires in the rural area were not caused by rural residents but by visitors to the rural area.
Planning issues in rural areas were generally not generated by rural residents but by property developers.
Rural residents did not make as much use of cultural and recreational facilities provided by the Council as other ratepayers and should therefore not be required to contribute to their operating costs to the same degree as residential ratepayers.
Most submitters emphasised the additional costs faced by the rural sector because of the lack of services and submitted that account should be taken of this factor in allocating costs to the rural sector.
Several submitters advocated the introduction of separate rates for productive farming/horticultural units. These submitters suggested that the Council look at a rating split between the residential and rural land components of properties.
At various stages of the hearings the Chairman gave an assurance to submitters that the Committee would review the environmental services and rural fire service allocations and would ask staff to report back on alternative mechanisms for rating of rural properties.
A number of rural submitters expressed their support for an increase in the uniform annual charge and several drew the Committee's attention to the significant increase in rates they considered they had experienced since local government amalgamation.
COMMERCIAL
Submissions from the commercial sector were heard by the Committee on the afternoon of 11 December and morning of 12 December.
A joint submission from the Canterbury Manufacturers Association, Canterbury Property Investors Association, North Canterbury Federated Farmers, Canterbury Contractors Association and the New Zealand Business Round Table was presented by Michael Hannah, Chris Smale and Philip Donnelly.
The Combined Group submission was in two parts, Part I, presented by Chris Smale, was concerned with the delivery of local government services and advocated the market testing of all services. Part II, presented by Phil Donnelly, dealt with the legal, theoretic and practical issues with respect to funding Council expenditure. Mr Donnelly submitted that the Council had not complied with the amendments to the Local Government Act, in that it had not followed the three step process prescribed by the Act; had allocated general benefits to sectors when general benefits, by definition, apply to the whole community; and had failed to fund direct benefits from user charges.
Peter Townsend addressed the Committee on behalf of the Canterbury Employers Chamber of Commerce and submitted that before the findings of the revenue study were adopted the Council:
Mr Townsend advised that his organisation was uncomfortable with the "subjective" allocation by the working party that had resulted in commercial ratepayers rates increasing by 4% or $1.45m.
Mark Munroe, South Island Local Government Convener of BOMA outlined the implications of the downturn in the Asian economy to the business community and sought recognition of the contribution the commercial sector makes to the local economy.
Mr Munroe urged the Committee to review the City Streets allocations bearing in mind that, in his view, most expenditure on city streets tended to be in residential areas, and that a high proportion of the heavy transport using residential streets was removal vans and vehicles associated with new building development which, he submitted, produced benefits to both the residential and commercial sectors.
2. REVIEW OF SUBMISSIONS
The Committee reconvened on 15 December 1997 to consider issues raised in the submissions.
ISSUES RAISED BY SUBMITTERS WHO ADDRESSED THE COMMITTEE
In reviewing the submissions from the above group of submitters the Committee requested the staff to report back on the following issues:
WRITTEN SUBMISSIONS
The Committee then reviewed the issues raised in the submissions from the remaining submitters and requested that the following action be taken in respect of the issues listed below:
The staff reports were considered at a series of seminar meetings held in late January/early February. At those meetings the Committee made a number of changes to the earlier work which will be incorporated in the draft funding policy to be presented to the 26 March Council meeting.
Recommendation: That the information be received.
CONSIDERED THIS 25TH DAY OF FEBRUARY 1998
MAYOR