New Plymouth District Council credits property owners $3.1 million to fix rates bungle
Photo:
Taupō District Council / Supplied
New Plymouth councillors have agreed to credit residential ratepayers an average of $102 each after a
gaffe in its annual plan
meant property owners faced a 12.8 percent rates hike rather than the 9.9 percent advertised.
At an extra-ordinary meeting on 22 July, councillors decided to try to find $3.1 million in savings to absorb the cost of the mistake.
In a chamber filled with members of the New Plymouth Ratepayers Alliance wearing black T-shirts with "Respect Our Rates" emblazoned on them, council chief executive Gareth Green kicked proceedings off with a lengthy apology.
"I stand before you today to introduce this paper for your decision making, but more importantly to own on behalf of this organisation an error which has let each of you, the community and ourselves down.
"Standing here having to introduce this matter brings me no joy, however, as your chief executive it is my responsibility to own what is a significant failing of this organisation."
The residential rates error was discovered as part of an internal review called for following an earlier GST bungle which could've cost council
$20 million in lost revenue.
The GST mistake - which had been characterised as a "typo" and "cut and paste" error - was corrected earlier this month.
As well as ironing out the average residential rates glitch, councillors also corrected an annual plan wording error relating to industrial water use which could've cost council a further $1.4 million in lost revenue.
An external Simpson Grierson review, which ran concurrently with the internal investigation, found council lacked financial reporting and modelling capability which "strongly suggests a need for training, and possibly recruitment / restructure and training".
Green was not sure exactly how the rates error occurred but said it involved an incorrect assumption about the average value of residential land.
"I put it into the context that there was a lot of pressure about getting rates down and being able to keep them down and that potentially could've contributed.
"We were going through a restructure process which adds stress and pressure into any organisation and there were a lot of other processes going on nationally and locally at the time.
"Just like in the airline sector a plane doesn't crash because one engine stops, it does when a number of things line up and we had a number of things lining up here which created this issue."
Councillors had to decide whether to offer the automatic rates remission, go ahead and charge the full 12.8 percent or initiate a Rates Replacement Proposal to increase the commercial / industrial differential rate for 2025/26 which would've required a round of consultation.
New Plymouth mayor Neil Holdom.
Photo:
RNZ / Robin Martin
Mayor Neil Holdom's recommended councillors opt for the rates remission.
He acknowledged councillor Amanda Clinton-Ghodes for repeatedly raising the issue of risk when council lost two senior finance leaders - one through a resignation - during the restructure period.
"Today's meeting is about transparency and finding a way forward. We've published the details of the errors and the external report including a suite of recommendations developed to ensure we are legally compliant and square these issues with the community in a fully transparent manner. The motion before you does that."
Deputy mayor David Bublitz said corrosion of the public trust the gaffes caused couldn't be overstated.
"The first thing we have to do is restore the trust of the public and we restore the trust of the public by doing what we said we were going to do which is rate them at the right number.
"We've got no choice. We then need to ... whoever is back [after the local body elections] ... needs to work hard to ensure that our council is a little bit leaner, a little bit more efficient and a little bit more innovative, so we can make that money back. We have to get it back."
Councillor Murray Chong wanted to be done with it and charge the full 12.8 percent.
"The real rate is 12.8 percent. That's it. We weren't being honest or we didn't realise we weren't being honest, but it wasn't 9.9 percent at all.
"So what do we do? Do we give you a remission or do we face the reality and pay it this year because the reality is because if we don't pay it this year we will have to pay it next year or we make cuts and how are we going to make cuts? We already tried to make cuts."
Chong didn't believe $3.1 million in savings could be found before June next year so council would end up borrowing to pay the shortfall.
Outgoing councillor Anneka Carlson-Matthews admitted she didn't often agree with councillor Chong, but she wasn't comfortable with lumping more debt on the incoming council either.
"To be fair I can't leave in good faith with a $3.1 million deficit for the [incoming] council on our mistake. That doesn't sit well.
"All the talk about us being able to find it [the money] and we're going to cut service levels and we're going to reign [spending] in. We reigned it in.
"And we heard from the CEO today that part of that reigning it in and restructure - which was great and we saved $10 million - was actually part of potentially why we're in the situation we are now."
Carlson-Matthews didn't believe council could find the savings without making significant sacrifices.
Councillors voted 13-2 in favour of the rates remission.
Rates bills for the first of four quarterly instalments were expected to be sent out at the end of this month as normal.
The amount owed showing on the bill would reflect the resolution in adopting the Annual Plan, but an "adjustment" or credit would be applied to each bill to reflect the decision made by the council on 22 July.
The credit would be spread across the year.
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