Rates Enquiry Report

-a letter to the Minister for Local Government
by Bob Keall

Hon. Nanaia Mahuta
Minister for Local Government
Parliament House
Dear Madam,  
Re: Rates Enquiry Report

We have to record our dissent from two points in the Report, and our affirmation of a third.

1. p.8 #57:
"The Panel (favours the promotion of a common system of valuation for rating purposes (see 2) and strongly favours the Capital Value system because of the closer relationship of capital values with household incomes." (separate issues)

Household/personal incomes and the private investment of capital are no concern of Council. Hardship is a matter for Government as in the Rates Rebate and postponement provisions.

The core function of Local Government is the reticulation of essential infrastructure, not a social agenda relegated by Government. No hard evidence is submitted in support of the subjective assertion—"closer relationship of capital values with household incomes." Insofar as it may be true it is no concern of Local Government. It is the traditional mantra of the Local Government Association. By contrast, our own case for Land Value Rating is replete with endorsements—Rates Relief

2. page 8 # 61.
"The Panel recommends that the previous model of a central government valuation authority be re-established to increase the level of professional resources being applied to rating valuations or that additional resources be provided to the Valuer-General to facilitate better quality control of valuations."


The establishment of a Government Valuation Dept around 1900 for the purpose of the Land Tax and Local Rates was a world first. It functioned well with only rare complaint to the Court set up for the purpose. The Department not infrequently would appeal its own valuation roll to preserve unassailable consistency throughout the country. Since the changes instigated by Government around 1990, the residual department, Quotable Value, has had to compete with others. This has led to applicants telling a Council what it wants to hear. On several occasions we have made representations first to Hon. Peter Tapsell in 1993, and later to the Ministry, drawing attention to irregularity, especially where Capital or Annual Rental Values are being considered.

The latest hazard has been the Auckland Regional Council's innovation of Smoothing the Rates over the disparate 3-year periods of 8 Councils, affected by varying economic factors of urban expansion, agricultural, residential and commercial components. Retrospection in 3 years time will be impossible. Clearly the aim is to make all Rates a sort of Uniform Annual Charge.

3. page 8 # 62.
The Panel also recommends councils make more use of their flexible rating powers so the rating burden better reflects value in use, rather than potential sale price. In the case of farming properties, this value in use basis would provide some redress for any current inequities in the rating of farmland, particularly given the Panel's recommendation that differentials be abolished.

a. " ... rating on value in use rather than potential sale price."
i.e. farming for capital gain rather than production and taxes now; tax-deductible expenses, life-style; weather and trade vicissitudes, with Bank support, yes. But the principle1? In 1989 the Officials Coordinating Committee for an Internal Affairs Department review of Funding for Local Government concluded:

  • The O.C.C. consider that the main thrust of the reform of local government funding should be based on a policy of going back to basics with the rating system.
  • That the ability of local authorities to tinker with the rating system may cut across national-interest concerns of central government.
  • That there be a nationwide uniform base for rating.
  • That undifferentiated land value rating is the only rating system fully consistent with efficient resource allocation. It encourages an optimal use of high-value sites because rates based on land value penalize inefficient usage of the site a landowner is nonetheless required to contribute financially to the community on the basis of that property's potential

With this we concurred thus

The historical evidence of Royal Commissions and Ratepayers confirm it, the present economic circumstances require it and future plans will make it imperative. Because Land Value Rating generates employment it is the key that will add credibility to all other Government policies, free market, S.O.E.s, Local Government reform etc. and will facilitate further reforms in social welfare, race relations, health, housing, police and so on. It will make these reforms easier and others unnecessary.

Addendum 20.12.03
A Regional Land Value Rate could be made tax-deductible, or a charge against the property at the Ratepayer's option, for the non-commercial Ratepayer. It might also allow thresholds of land value and income as introductory concessions.

(Refer Rates Relief 20.4.07)

b. that Differentials be abolished.

Differentials should be retained to relate income to expenditure in urban and rural areas respectively. So that each enjoys the benefits of Land Value Rating but not at the expense of the other. They should also be used to off-set the advantage of tax-deductibility. They should not be misused, as in Auckland, to load the suburbs to benefit the city centre, in addition to the tax advantage.


The 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 Capital 2 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 exemplifies a coordination of

  1. relieving natural resources of any public charges to enhance the privatized unearned speculative value,
  2. privatising natural monopoly profits
- both wrongfully, at the expense of the public sector.

It indicates an infiltration by The World Bank of the Labour Party to neutralise effective, radical opposition to the New Right global agenda of privatising natural resources i.e: owning the earth and privatising the Rent.

Yours faithfully
Robert D Keall
Hon Director/Secretary
The New Zealand Land Value Rating Association
Objective: One rating system on the Value of Land.

1 "New Zealand in the making," Prof. J.B. Condliffe, D. Sc

2The Corruption of Economics, Dr. Mason Gaffney, Prof. Economics, California University.
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