The original Provinces of NZ drew their revenues from the sale and lease of land.
When the Provinces were replaced by Local Government in 1876 Rates were based on
the Annual Rental Value, as in England. Within 6 years it became apparent, with
most properties being sold rather than rented, the Capital Value was a more realistic
base. Accordingly Councils were permitted to switch to or from Capital or Rental
value by resolution. Both are based on the composite value of the land and
improvements and are but the capitalised/annualized version of the other.
About this time the writings of John Stuart Mill, Henry George and others drew
attention to the unearned increase in land values generated by growing communities
whether from pressure of population or derived from public works. As a result Sir
George Grey and his associates not only introduced a Land Tax but also a measure
allowing local Rates to be collected from land values alone if a poll of ratepayers
required it. The measure was blocked by the Upper House for three years but in 1896
it became possible for 15% of Ratepayers to demand that a poll be held to decide whether
the Rates should be collected from the Unimproved Value only, exempting the improvements.
Under this dispensation hundreds of Rating Polls were held.
Around the turn of the century there was an active Single Tax League which published
5000 copies per month of the magazine called "The Liberator" advocating
Henry George's ideas in general and Unimproved Value Rating in particular.
In 1924 the NZ Land Values League was incorporated with Hon. George Fowlds as President
and Justice P.J. O'Regan as Vice-President and Chairman. In 1932 it appears to have
gone into recess but was revived in 1943 under the chairmanship of Rolland O'Regan
(son of P.J. O'Regan), with 20 members, and the name NZ League for the Taxation of Land
Value (Inc). One of Rolland's early initiatives was to invite Miss Betty Noble to NZ
to run Henry George classes. These commenced in 1950 along with monthly meetings to
discuss topical issues. Over the post-war boom years interest flagged, members died,
and U.V. Rating became almost universal and largely taken for granted, with any
sporadic attention possible or necessary being undertaken by Rolland. Nevertheless
Betty persisted in running classes, with or without assistance, for the next 25 years,
in the YMCA, the Polytech or in her own home. She has influenced many hundreds of people
with George's ideas.
In 1964 the name was changed to the NZ Unimproved Value (later Land Value) Rating
Association to focus on Rating. Rating Bulletins were frequently issued to Local
Government members, discussing topical issues and encouraging polls to make mandatory
LV Rating even more imperative.
In 1968, Rolland recognised Land Value Taxation in any form was vulnerable to the whim
of every Minister of Finance or by Local Government at every level every year. (In 1896
the gestation period of Land Value Rating had been three years in NZ's Upper House about
the time when Rolland's father (P.J.) and Sir George Grey were in Parliament. Finally
the dispensation was granted allowing a petition to demand a poll on the issue of Land
Value Rating. Despite the rapid success thereafter at the hands of Ratepayers there remained
a crafty opposition who constantly tinkered with it, confusing even the most assiduous student.)
On this basis Rolland reconsidered his inherited ascription to Land Value Taxation and submitted
a paper to the 12th International Union Conference at Caswell Bay, Wales, September 1968. In
this he proposed "State Leaseholds as the basis for Land Reform." That was 40 years ago.
In support, he noted the established precedents in Australia and NZ and the advocacy of a leading
jurist in Australia. (Hon. Justice Rae Else-Mitchell)
In advancing his case he was mindful of the political hazards of Land Value Taxation and
the practical problem of the ever-diminishing tax base as the tax increased. He was
also aware of those other natural resources like minerals, water rights, airwaves, some
forestry, fishing, electricity generation and distribution etc. for which Land Value Taxation
Accordingly he sought to institutionalize the principal of Resource Rental by whatever means
was most appropriate. One member at the Conference regarded the proposal as the most sense
he had ever heard at a conference and proposed to fund Rolland for full-time work on it. On
the strength of that initial gesture Rolland published his books.
In 1980 he published "Te Ara Tika" (The Right Track/Road/Way—for NZ),
elaborating his views on leasehold tenure as the basis for a stronger economy to be
derived from greater integration with Australia, essential to support an adequate common
defence policy. Two years later the CER (Closer Economic Relations) Agreement with Australia
was signed by the National Government, but without the proposed economic base.
By 1982 hundreds of Rating Polls had been held, so that in just 86 years 90% of all
Municipalities had by poll adopted Land Value Rating which accounted for 80% of local
Government revenue. The main dissidents were remote rural areas, a few Counties with
a dairy factory carrying a big proportion of the Rates, the old Boroughs on the Auckland
isthmus largely parasitic on Auckland City, Lower Hutt (then a dormitory suburb of
Wellington without its own hard core of land values), and Queenstown—a wild-west
type speculators' paradise.
By the early '80s regular meetings had become impractical with a dwindling, widely
dispersed membership and with Rolland's failing health. In 1984 incorporation was
abandoned for those reasons.
In 1985/86 Rolland crystalised his representations on Local Government Finance and
addressed them to the Labour Party Policy Council, and the Caucus Committee on Local
Government With his credentials within the Party and in Local Government, plus the
Labour Party's formal adoption of Land Value Rating in 1948 (of which he reminded
them) he reasonably expected some progress from the new Labour Government.
The Land Tax which in 1922 accounted for 10% of the Budget had steadily atrophied to
about 0.4% in 1987. Rolland steadfastly, eloquently and effectively opposed any assault
on this charge and finally urged it be allocated to Regional Local Government for major
works or disaster relief. A vested interest such as that would have entrenched it
irrevocably, in the right place (refer "Rates Relief").
For those who see the ultimate objective as the collection of the full economic land
rent at the local level this would have just about sewn it up. A quiet bloodless revolution
democratically achieved. . Having had no response after a year he widened his approach,
with scant response once again—ominously in hindsight. Instead the Labour Government
abolished the Land Tax in mindless, futile, political expediency, at a time of Rolland's
In 1988, when we expected the Labour Government to crown 100 years of progress with success,
it moved to destroy it.
It seems that during 1987 the then Government let it be known that it favoured Capital
Value Rating—for the wrong reasons (infra). Accordingly, in 1988 devious reversions
to Capital Value began. Christchurch moved from partial Land Value back to full Capital
Value by Council resolution when we believe a poll should have been held. Dunedin
fragmented its General Rate into Separate & Special Rates so they could then be
changed by Council Resolution without recourse to the Ratepayers, and despite their
vociferous protest march. The Mayor, Sir Clifford Skeggs, threatened to take his Council
to Court. The Council action was not in fact illegal but clearly a misuse of its powers.
In 1953 the Dunedin Ratepayers had voted for Land Value Rating with a dramatic increase in
building permits as a consequence. In Wellington a year-long Rates Review Committee came
down firmly in favour of retaining Land Value with an adjustment to the Differentials
between City Centre and Suburbs. Nevertheless, the then Mayor contrived to have Capital
Value narrowly adopted but needed an Order-in-Council to validate his procedures which a
QC and the local press regarded as illegal.
In 1987/88 the new Labour Minister for Local Government began the restructuring of
Local Government. In the Rating Powers Act 1988/89 the Government withdrew the
traditional right to demand a poll, at the same time as it propounded the merits
of "local decisions locally made!" He then promoted a reversion to Capital
Value Rating wherever he could, finally proposing that wherever Capital Value Rating
had been, or was ever adopted, (by Council resolution now) it would be irreversible.
That was dropped. Meanwhile the grapevine had early delivered its message. So that
Dunedin, Christchurch and finally Wellington reverted to Capital Value by means various,
definitely devious and contrary to popular reaction. Rolland was quietly mortified.
Ninety years of progress, every step democratically achieved, vandalized and undone by
erstwhile colleagues prepared to do by stealth what no known enemy had dared to do.
The change to Capital Value, in his beloved Wellington especially, devastated him.
His shining example of urban renewal to Auckland and the world, of a city united,
cleanly and honestly run without faction, division or strife; rescued from partial
to complete Land Value in 1927 by his own father reversing the Council's endeavours;
now sold out, clumsily, illegally, arbitrarily, contrary to popular input and with a
Knighthood for the perpetrator.
Subsequent Council attempts elsewhere to revert to Capital Value have contentiously
failed due to vigorous popular opposition galvanized by this Association. So that
due to Rolland's continued efforts Land Value Rating has become entrenched as the
norm and any attempt to remove it excites the demand for Citizens Initiated Referenda
on any issue, including Rates.
Since the time of restructuring in 1989, combining urban with rural areas the 90% of
municipalities which by poll had adopted Land Value Rating has been reduced to about
40% (infra). Wherever Land Value Rating applies it has been adopted by poll of Ratepayers,
representing a lot of work and profound social concern. Wherever Capital or Annual
Value Rating applies it has been imposed by Government or Councils, contrary to the express
wish of the Ratepayers in almost every case.
In 1990 the Minister introduced the measure that would abolish Annual Rental Value
Rating and would make Capital Value Rating irreversible wherever it was in place or
might be adopted subsequently. The move failed and the Government changed at the end
of that year. Since then there have been several moves by Councils to revert to Capital
Value. All have been so vigorously opposed by Ratepayers, even without the right to
demand a poll, that Councils have backed off. A typical instance of this was the postal
poll in Waitakere where a determined attempt by Council was rejected by more than 8:1,
in line with others in Palmerston North, Horowhenua, Dannevirke, New Plymouth, Kaipara,
Tararua, Waimakariri and Franklin. One or two moves have succeeded but have later been
reversed. One or two changes have stuck—uncomfortably. Some have compromised
with a mix of Land and Capital Value, for no apparent reason. In 2006 Manukau City
adopted ARV. The change was fraught with dissent, illogical reasoning and has yet to
be vindicated. A valid confusing consideration in the moves to revert to Capital Value
arises from the amalgamation of urban rural areas (supra) which previously raised and
spent their own Rates. Amalgamation can mean that a highly valued rural property might
be paying for urban facilities. The solution is not to revert to Capital Value Rating,
but to apply a Differential Land Value Rate which relates income to expenditure in both
town and country permitting each to enjoy the advantages of Land Value Rating but not
at the expense of the other.
The practical consensus now seems to be a basic Land Value Rate with Differentials to
distinguish between Residential, Rural and Commercial zones and to offset the advantages
of tax-deductibility enjoyed by some, supplemented by UACs [Uniform Annual Charges].
NB: The Differentials should not be extended to allow a hotch-potch of inner city zoning
dispensations, or political contrivance.
Rates now required to meet the widening cost of Regional Government due to devolution from
Central Government should be accompanied by the shared Land Value Rate proposed. (Refer
"Rates Relief") Revenue sharing, they call it! Local responsibility for the
allocation of funds is preferable to politically motivated Government grants.
This historical sketch shows that by about 1990 Land Value Rating had become an example to
the world, and should be made mandatory, on the evidence! Significantly the Government-led
assault on this coincided with the privatization of Telecom, NZ Rail, and others, largely to
foreign interests, ravaging our Current Account since.
Sir Roger Douglas, Minister of Finance at that time, is said to have later become the highest
paid agent for the World Bank. It has been reported he went to Mongolia to persuade them to
put their natural resources on the world markets enabling "Mums and Dads" anywhere
to participate in the World Bank's initiative.
For years now our senior Reserve Bank and Treasury staff have been trained at the World Bank.
To them "Land" (i.e. natural resources) is just another form of Capital1,
wherein Rent and Interest are synonymous, and regulating one regulates the other. It doesn't. Easy
money means dear land and low wages, currently a serious topical issue. Capital should be
the savings from the wages of labour. Wages and interest should move in tandem. Labour
should be the Capitalist, not the "landowner" collecting Rent disguised as interest.
The assault on Land Value Rating coincidental with the sale of natural monopolies 2 exemplifies
a contrived coordination of
relieving natural resources of any public charges to enhance the privatized unearned speculative value,
privatizing natural monopoly profits—both wrongfully, at the expense of the public sector.
It indicates an infiltration of the Labour Party by the World Bank to neutralise
effective, redical opposition to the New Right global agenda of privatising natural resources:
i.e. owning the Earth and privatising the rent—a sacrosanct industry!
In 1993 our paper to The Melbourne International Conference was entitled "NZ Crucible For
The World". It still is, which may account for the subversion above.
In 1997 we widened our purview and where appropriate have made representations, under the
heading "Resource Rentals for Revenue and Justice"—paying for what we hold
or take, not what we do or make.
Land Value Rating is an expression of that and distinguishes public from private property.
1 "The Corruption of Economics"—Dr. Mason Gaffney,
Prof. Economics, University of California.
(Download pdf ... )
2 Natural monopolies are rights to land, water, airwaves, minerals, fisheries,
hydro-power generation and supply, any public utility such as a port, airport, or the monopolistic
rights to reticulate wires, pipes, rails, roads, and the like; even the right to poll.