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Taxpayer Talk: Should local councils freeze rates?

Despite the national health and financial emergency, most councils are still planning to hike rates - some up to nine or ten percent. Louis interviews Hutt City Councillor Chris Milne & Christchurch City Councillor Sam MacDonald on their response to our campaign calling for a nationwide rates freeze and ways councils can save money.

You can support our campaign calling for a naitonwide rates freeze at www.ratesfreeze.nz. The dashboard referred to in the podcast is available at www.taxpayers.org.nz/rates_dashboard

You can subscribe to Taxpayer Talk via Apple PodcastsSpotify, Google Podcasts and all good podcast apps.

Where does your council stand on a rates freeze?

Councils across the country are scheduled to increase rates by as much as 10% in the coming months, despite the hardships faced by households in the wake of the COVID-19 lockdown. Click here to sign the petition for a nationwide rates freeze.

Find out where your local (and regional) council stands on rates freezes in the table below.

Green means a council has signaled a rates freeze.
Orange means a council has signaled a reduction in planned rate hikes.
Red means a council has not signaled any reduction in planned rate hikes.

This dashboard is subject to ongoing updates. Please contact team@taxpayers.org.nz if you have more up to date information.

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Council Notes (click for source)
Ashburton District Council  
Auckland Council 'has not yet signaled a shift on rates'
Bay of Plenty Regional Council Has signaled a rates freeze
Buller District Council  
Canterbury Regional Council  
Carterton District Council Council voted down rates freeze proposal
Central Hawke's Bay District Council  
Central Otago District Council Signaling "significant" reduction in proposed rate hike
Chatham Islands Council  
Christchurch City Council Not planning a rates freeze. Will only defer rates payments for some groups
Clutha District Council  
Dunedin City Council Has signaled a rates freeze
Far North District Council  
Gisborne District Council  
Gore District Council  
Grey District Council  
Hamilton City Council Mayor says rates freeze is 'too broad a brush'
Hastings District Council  
Hauraki District Council Plans to adopt scheduled 5.4% rate hike
Hawke's Bay Regional Council Has signaled a rates freeze
Horowhenua District Council  
Hurunui District Council  
Hutt City Council Mayor signaling a 'significant reduction' in planned 7.9% rate hike
Invercargill City Council Councillors taking a 'wait and see' approach
Kaikoura District Council  
Kaipara District Council Chief executive says council 'haven't ruled out a rates freeze yet'
Kapiti Coast District Council  
Kawerau District Council  
Mackenzie District Council  
Manawatu District Council  
Manawatu-Wanganui Regional Council  
Marlborough District Council Has signaled replacing a 4.86% rate hike with a 2.2% hike
Masterton District Council  
Matamata-Piako District Council 'exploring whether it can shelf or postpone a flagged average rate increase of 6.4'
Napier City Council  
Nelson City Council Still scheduled to hike rates by 3.7%
New Plymouth District Council Mayor signaling a reduction to planned 6.42% rate hike
Northland Regional Council  
Opotiki District Council  
Otago Regional Council Has no immediate rate relief plan
Otorohanga District Council Mayor says council has not discussed rates relief
Palmerston North City Council  
Porirua City Council Mayor has proposed replacing a 6.75% hike with a 4.98% hike
Queenstown-Lakes District Council Set to proceed with scheduled rate hike
Rangitikei District Council  
Rotorua District Council Mayor and deputy oppose rates freeze
Ruapehu District Council  
Selwyn District Council  
South Taranaki District Council Mayor 'would be keen to see something like a rates freeze in theory'
South Waikato District Council  
South Wairarapa District Council  
Southland District Council  
Southland Regional Council  
Stratford District Council Council 'will have a discussion about our rates increase'
Taranaki Regional Council 'would like to even see a small reduction in rates if they possibly could'
Tararua District Council  
Tasman District Council Going ahead with scheduled 2.97% rate hike
Taupo District Council  
Tauranga City Council Has replaced a 12.6% rate hike with a 7.6% hike
Thames-Coromandel District Council Still plans to proceed with scheduled 9.98% rate hike
Timaru District Council  
Upper Hutt City Council  
Waikato District Council Going ahead with scheduled 3.66% rate hike
Waikato Regional Council Has signaled a rates freeze
Waimakariri District Council  
Waimate District Council  
Waipa District Council 'has said a zero rates increase is unlikely but is looking at how to limit any rates rise'
Wairoa District Council No plans for a rates freeze
Waitaki District Council  
Waitomo District Council Mayor asking councillors to support a freeze
Wellington City Council Majority of councillors are calling for a rates freeze
Wellington Regional Council  
West Coast Regional Council  
Western Bay of Plenty District Council  
Westland District Council  
Whakatane District Council  
Whanganui District Council  
Whangarei District Council  

 

Taxpayer Talk: NZ Initiative on COVID-19 - Dr David Law and Dr Eric Crampton

In this episode, Jordan talks to Dr David Law (Research Fellow) and Dr Eric Crampton (Chief Economist) at the New Zealand Initiative thinktank. Dr Law has just published a paper, Policy Point: Short-time work to maintain employment and Dr Crampton a Research Note: Effective Treatment: Public policy prescription for a pandemicBoth join us to discuss their papers, as well as why current calls from leftwing groups for a UBI are misguided.

You can subscribe to Taxpayer Talk via Apple PodcastsSpotify, Google Podcasts and all good podcast apps.

Taxpayers' Union launch podcast: Taxpayer Talk

In response to the speed in which the economic and political environment is changing due to COVID-19, we have brought forward the launch of our podcast.  The first interview was last Thursday and Friday with Damian Grant and Michael Ridell who take opposing views on the extent to which the Government should intervene to keep people in their jobs during the crisis.

You can subscribe to Taxpayer Talk via Spotify here (press "follow" after clicking the link). Apple Podcast approval is still in process.

We welcome your feedback / constructive criticism as we master the art of casting the pod from self-isolation!

 

Pandemic response: Campaign for nationwide rates freeze launched

The Taxpayers’ Union has launched a campaign aiming to force New Zealand’s mayors and regional council chairs to commit to a 12-month rates freeze in light of current economic challenges.

While the Government prioritises economic relief for struggling families and employers, most local councils are still planning significant rate hikes in the coming months. Some have plans to hike rates up to nine or ten percent from 1 July.

In the letter to mayors and chairsTaxpayers’ Union Executive Director Jordan Williams says, “The Government is currently prioritising economic relief for businesses and households facing economic calamity. But rate hikes at this time of economic turmoil will serve to exacerbate immediate financial stresses and undermine the Government’s relief strategy. Any economist will tell you that a recession is the most damaging time to hike taxes.”

The letter advises councils to cater for the reduction in expected revenue with cuts to lowest-value spending, rather than borrowing. “Households and businesses are cutting costs and it is only fair that your council does the same — we must all cut our cloth to fit the new economic reality.”

A public petition has also been launched at www.RatesFreeze.nz.

Exclusive: Ministry of Health hasn't asked where staff have traveled

The Ministry of Health has not been asking staff returning from overseas where they traveled, the New Zealand Taxpayers' Union has learned.

An information response from the Director-General's office confirms that "The Ministry has not actively recorded or captured personal travel of staff and Ministry staff have not been required to inform the Ministry of their plans when they take annual leave."

As a result, the Ministry was unable to inform the Taxpayers' Union whether any of its staff had traveled to or via China in the period leading up to 4 March.

We requested this information after receiving a tip-off that a staff member at the Ministry had recently returned from China and attended a social event with colleagues.

Requiring staff to report on their international movements costs nothing. It's a basic precaution that countless businesses up and down New Zealand are taking.

We fund the Ministry of Health to provide leadership for the entire health system. If this is the example being set by our top health bureaucrats, how do they expect other employers to be prudent?

COVID-19 - Government's package a mixed bag

The team have spent yesterday afternoon working through the Government’s COVID-19 response package. A couple of the staff are in self-isolation, so we’ve well and truly rehearsed using the virtual technology in preparing this note and our media commentary.

In summary, the package is not as comprehensive as many economists were expecting. On the eight measures we have been lobbying for, the Government has picked up some of the ideas but left many out. Grant Robertson has signalled more is to come on Budget Day (14 May) or even before then.

Overall, yesterday's package is not as focused on protecting jobs as we were expecting. For example, the wage subsidies to employers are effectively limited to organisations with 20 or fewer staff.

The Government also appears to have used COVID-19 to make some permanent policy changes. For example, while temporary boosts to income for beneficiaries and those most vulnerable are justified, the Government has increased benefits by $25 per week on a permanent basis (that is in addition to the normal annual adjustment for wage inflation). 

The Winter Energy Payment (paid to all on any non-student benefit or NZ Super) is also being doubled to $40.91/week for singles and $63.64/week for couples. But in this case, just for this year.

Summary of Government's response package:

  • $500 million boost for health (the cost is equal to $278/household)

  • $5.1 billion in wage subsidies for affected businesses in all sectors and regions, available from today ($2,833/household)

  • $126 million in COVID-19 leave and self-isolation support ($70/household)

  • $2.8 billion income support package for our most vulnerable, including a permanent $25 per week benefit increase and a doubling of the Winter Energy Payment for 2020 ($1,556/household in the first year)

  • $100 million redeployment package ($56/household)

  • $2.8 billion in business tax changes to free up cashflow including a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax ($1,556/household)

  • $600 million initial aviation support package ($333/household).

Our take:

The New Zealand Taxpayers' Union is welcoming the temporary measures to ease pressure on employers contained in yesterday's economic relief package.

Yesterday's relief package is a vindication of the long-term fiscal prudence by a generation of finance ministers. Measures like temporary wage subsidies are extremely costly, but can be afforded thanks to successive governments' commitment to low public debt.

We're pleased to see the waiving of interest for late tax payments, and the increase to Winter Energy Payments which will help keep vulnerable older New Zealanders at home. We recommended these changes in our briefing paper released Monday. The lift in the threshold for provisional tax will also be a welcome relief to small businesses.

We’re open to increasing benefits for the duration of the pandemic, but COVID-19 is not an excuse for locking it in. For context, the cost of the benefit hike is around $2.3 billion — almost five times as much as the boost to the health system. Every extra dollar spent here means one fewer for the productive sector and frontline health services.

There are also policy measures such as the changes to depreciation treatments which, although we support them, seem totally unrelated to the immediate threats to business cashflow and New Zealand jobs. It suggests this was very much policy designed to be seen to be doing something, rather than policy targeted at the specific challenges we face now.

Elephant in the room: 1 April minimum wage hike

The big hole in this package is supporting businesses faced with higher costs due to the minimum wage going up on 1 April. The people who get slammed most will be the working poor, earning the minimum wage or close to it, who work for a large employer that doesn't qualify for the wage subsidy package or will only receive limited assistance. 

The obvious measure is to pause the minimum wage hike until economic conditions allow.

More information:

For convenience, we have copied links to the Government’s announcements and factsheets below.

Government's media releases:

Minister's speech to Parliament

Policy factsheets:

COVID-19: Taxpayers’ Union release recommendations for New Zealand’s immediate economic response

Responding to the developing threat of COVID-19 to the New Zealand economy, the New Zealand Taxpayers’ Union has released a paper outlining its recommendations in advance of the Government’s package being announced tomorrow.
 

As fiscal conservatives, it does not come naturally to call for a dramatic expansion of the size of state spending. However, a core role of government, and why we pay taxes, is to protect the citizenry at times of national systematic shock such as war and pandemic.

COVID-19 is the biggest economic event of my lifetime. It is essential that the Government takes all steps to protect lives and livelihoods now, but also our ability to recover quickly once the health crisis is over. It is with that in mind that our economic team has drafted these recommendations for emergency measures.
 
We accordingly urge the Government to adopt the measures outlined below, which are explained in our paper:

  • Provide all New Zealand employees with one month of sick leave in addition to existing rights for the rest of 2020, paid for by the taxpayer;
  • Use buyouts rather than bailouts. Taxpayer funds paid must be in return for the Crown taking a significant/majority or total shareholding;
  • Scrap the 2020 increase to the minimum wage — but if the Government insists on going ahead, have it meet the costs to employers for the next 18 months;
  • Fund unlimited childcare for health workers, aged care workers, and Police staff for the next 18 months;
  • Partner with Progressives, Foodstuffs and Uber to make grocery delivery free;
  • Give lump-sum payments to taxpayers by retrospectively cutting the bottom tax rate from 10.5% to 5% for the 2019/2020 tax year;
  • Expand 'Winter Energy Payments' to begin immediately and continue through winter 2020; and
  • Suspend interest and penalties for late tax payments from employers.

 

Picture of wasteful spending: taxpayers coughing up for arty Italian holiday

The New Zealand Taxpayers' Union can reveal that Creative New Zealand and Museum of New Zealand Te Papa Tongarewa are providing nearly $900,000 in taxpayer money for artists and curators to attend the Venice Art Biennale in 2021.

Showing off to Italian art collectors might be glamorous and good fun, but taxpayers shouldn't be forced to cover the cost of the lucky few who get to do it.

Opening night alone comes with a $100,000 fee. Outrageously, that’s the least of taxpayers’ worries, because another $770,000 is set to be frittered away on flights, freight and hotel rooms.

Not a single expense was spared for the truly needy in our society: artists and gallery curators.
 
With tough economic times coming, this ‘nice to have’ spending needs to be stopped.

Revealed: Former Quitline operators hoard millions in taxpayer funds

Paul Callaghan swandiving

The Taxpayers' Union can reveal that The Quit Group the charity originally commissioned to run Quitline continue to hold $2.8 million in taxpayer funds, despite having lost their government contract in 2015.

The Quit Group promised to hand the funds over to anti-smoking initiatives. They have failed to keep their promise, and the Ministry of Health has failed to hold them to account.

In fact, since 2015 the Quit Group have been using the funds to collect investment income and pay board membership fees to themselves – $72,000 per year, or $18,000 per board member.

To make things worse, the Chair of the Quit Group is Chris Cunningham, who has recently been investigated by Charities Services for running up $128,000 in travel expenses as Chair of the Hepatitis Foundation.

The detail:

In 2016 RNZ reportedThe Ministry of Health called in lawyers for advice and has since reached an agreement with the Trust on using the money to support the government's goal to make New Zealand smoke-free by 2025. Ministry spokesperson Grant Pollard said that any Ministry funding remaining with the Quit Group Trust must be used for the purpose of supporting the 2025 Smokefree goal. He said the specifics of how the funds would be used have yet to be decided and is still being worked through. "The Ministry still has the option of auditing the Trust if an agreement can't be reached on how the funds will be utilised."

In 2017, the Ministry conducted this audit, but was hampered as the group claimed to have archived its records with no IT platform for retrieval. However, based on 'assumptions and estimates', the Ministry concluded that The Quit Group had received a funding surplus of $435,700 between 2007 to 2016.

Moreover, according to The Quit Group’s latest financial statements, it still has assets totalling $2,726,737, down from $3,164,394 in 2016. The Group has no staff, but continues to gain investment income from these assets and has paid out $702,296 in expenses since 2016. These expenses include $72,000 per year in fees for the four board members. The Group's four board members are Chris Cunningham, Janet Pearson, Mary McCulloch, and Annette Milligan.

An information response released to the Taxpayers' Union makes for disturbing reading. The Ministry concedes that it failed to stipulate any timeframe in which the group would have to use its funds. The Ministry does not plan to refer the group to the Charities Commission, and will instead "encourage the Trust to commit to spending the reserves. . .in a timely and appropriate matter."

This beggars belief. The Ministry has already let this group off the hook for four years. All this time, The Quit Group's board members have hoarded three million dollars, eating away at it by paying themselves board fees for doing stuff all. It's an insult to the ailing New Zealanders who desperately need anti-smoking support and other core health services.

The Minister of Health needs to step in to refer The Quit Group to Charities Services, so that the Government can repossess the funds on behalf of taxpayers.

Finally, the gravy train has to end for Chris Cunningham. He should by now be discredited from holding any of his taxpayer-funded positions. These include:

  1. Hepatitis Foundation (board member)
  2. The Quit Group (Chair)
  3. Maori Knowledge and Development Panel (Chair)
  4. Massey University’s Research Centre for Maori Health and Development (Chair)

Just how badly can one man rip off taxpayers?


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