Rates Increases Could Spell Business Closures

Auckland Council business rates are unfair and filled with anomalies, says Auckland Chamber of Commerce head Michael Barnett. And last night’s announcement of a $6 million of grants for homeowners and businesses ineligible for a rates cap won’t help.

As the reality of the rate increase becomes apparent, Mr Barnett says it is likely to herald the closure of a number of businesses.

A sample survey of more than 600 Auckland businesses found that two thirds had an increase in Auckland Council rates and many respondents expressed strong reactions to the rates increase.

“There’s a strong sense that businesses feel Council has been unfair and that they have been told one thing and the reality is very different. Businesses are telling us that Council’s claims of acting fairly and equitably are ‘farcical’.

“Last night Auckland Council announced a grants scheme including $4 million for businesses – this is band-aid politics and emphasises the rating system is unfair. It shows Council did not fully test the rating model and certainly did not take into account the ability to pay. While the grants will help some businesses, there will be those who still face increases which are inequitable.”

The Auckland Chamber survey found that 42 per cent of those whose rates had increased were facing a rise of more than 10 per cent, while 19 per cent experienced a rise of three to five per cent.

“The Chamber has expressed concerns about business rates increases for some months,” Mr Barnett said.  “And the harsh reality has hit home as business people received their rates demands for the 2012/2013 year.”

Early analysis of the results of the survey which closed earlier this week also indicated that almost two-thirds of those surveyed said the rates increase and additional wastewater charges will put pressure on their bottom line.

“A number of businesses have told us they are considering closing shop and moving off-shore,” Mr Barnett said. “Businesses are finding it hard enough to survive in the current flat economy and for many, this rates increase is the tipping point to either close up shop or shift their operation offshore.

“The very people who are contributing to the wealth and economy of the city are being unfairly targeted with unreasonable increases at a time when business is already difficult and there is little sign of an economic recovery.”

Mr Barnett said the Chamber will be discussing the survey results further with Auckland Council.