Many South Wairarapa households are paying substantially more in rates again this year under the impact of both a planned 37% hike in district council spending and a major redesign of the rating system.
Rates for the first quarter of 2024-25 are due on 20 August – and for higher value households with all council services in Martinborough, Featherston or Greytown, the district council component of their bill is up another 18%-plus on last year.
For some, the increase is much higher – a $1.4 million property is, for example, paying 32% more this year.
On the flipside, in-town households with a lower capital value are paying only 2-6% more than last year and lower value commercial properties in the three towns are, in many cases, enjoying a rates reduction.
These changes all occur in the South Wairarapa District Council (SWDC) component of rates bills, before regional council rates are added — they’re changes that together become the SWDC’s declared 14.7% rates increase for 2024-25. That’s the so-called “combined effect” of the annual plan and budget adopted on 26 June.
The year’s 14.7% rise will add to South Wairarapa’s reputation for rates hikes among the highest in New Zealand. In fact, the district’s overall rates have risen solidly since 2020 and this year comes on top of SWDC’s 19.8% hit on ratepayers last year (2023-24).
Publicly available rating information on the SWDC website indicates many South Wairarapa households are now paying twice what they did back in 2020-21.
Rating system redesign
This year’s 14.7% is meaningless to individual ratepayers, especially after the SWDC redesigned the rating system to make property capital values (CVs) the basis for determining much more of what makes up the total of each rates bill. CVs are obviously higher than land values and they vary hugely across the district. The redesign favours the owners of lower value properties _ urban and rural.
For owners of lower value commercial units in the three towns, SWDC examples indicate that rates are down 3-9% compared with last year.
Higher value commercial properties in Martinborough and Greytown are paying significantly more – 46% more in the case of at least one Greytown business.
For farmers, the SWDC figures show a similar story with rates falling this year for lower value pastoral and dairy properties – down 12% in one pastoral example. Higher value farms are paying more although council examples suggest that their rates increases this year are below that overall average of 14.7%.
For owners of vineyards and horticultural properties, rates are definitely up this year – 40% up in one SWDC example, reflecting the impact of shifting to CVs for rates assessment.
SUIP rating
That 14.7% might seem laughable to 500 or so South Wairarapa ratepayers captured this year by the SWDC’s extension of the Separately Used and Inhabitable Parts (SUIP) rating rule. This part of the system redesign is intended to inject greater fairness into how the ever-growing rates burden is shared across the district.
A ratepayer operating an accommodation business at their home property is now required to pay additional, per-SUIP rates – and for those receiving all council services, this year’s bills are up 80% or more.
SWDC is introducing a rates remission policy for property owners with multiple SUIPs but not engaged in public accommodation activities. It remains to be seen how many ratepayers – and their customers or permanent co-residents – will be paying this new, higher component of rates in 2024-25 and beyond.
Budget spending
Increasing rates are, first and foremost, the outcome of council budget decisions. Substantial increases in the bills of some ratepayers don’t push up the total council rates revenue but rather they lessen the burden on others.
SWDC expects to take in total rates of $29.75 million this year – an increase of $4.18 million or 16.4% from the budget adopted for last year (ended 30 June 2024). These dollar values do not include GST or the regional council rates component collected by SWDC. (Note that until the SWDC reports actual rates receipts and expenditures for 2023-24, that year’s budget is all the public can see.)
The increased 2024-25 rates take – at a percentage increase four times New Zealand’s current official inflation rate – is driven by SWDC’s substantially higher spending plans for operations and capital projects this year.
Budget statements, adopted on 26 June, show planned operating expenditure of $37.8 million during the year now underway – a hike of 37% from $27.4 million in the 2023-24 budget.
These are cash amounts SWDC expects to pay suppliers, employees and bankers (the latter in interest charges), and they are covered by cash inflows from ratepayers each quarter along with the council’s other sources of income (mainly Waka Kotahi roading subsidies. plus fees, licences and user charges).
Past council annual cashflow statements show spending on operations in 2020-21 was $21.3 million – and five years on (this year) SWDC is, in effect, spending 77% more on its operations (see Chart).
Rates have gone up year-by-year to help fund relentless growth in planned council spending.
Actual rates bills
Ratepayers have long been seeing the impact in their actual bills which include, of course, regional council rates and GST. Note that regional council rates are not rising as fast as the SWDC rates component.
Analysis of typical South Wairarapa rates accounts as received by ratepayers shows:
- Eight higher value Martinborough properties (with CV’s between $1.1 million and $1.9 million) are paying an average $7,180.18 in total rates this year. Back in 2020-21, the average bill for the same eight properties was $3,499.50 – a five-year increase of 105%.
- Eight lower value Martinborough properties (CV’s between $600,000 and $800,000) are paying an average $5,440.54 this year. Back in 2020-21, the same eight properties had an average rates bill of $3,229.51 – the increase is 68%.
