Wednesday, August 26, 2009

Motel Rates Demand

We appreciate hearing from fellow moteliers. We enjoy the increasing frequency of contact via Skype, email and phone.

Local councils seem to be a recurring theme at the moment.

One chap from the Far North that contacted us recently is not happy with a disproportionate rates burden falling on his lap and sent the following email to us:

"Here in Paihia in the far north our general rates have gone up between not much and more than 100% depending on who you talk to. The general rates have gone up 3.9% this year, but the main culprit is the dreaded toilet pan tax. This has gone up in the last year or two from $244.00 per pan per year to a whopping $430.00 per pan per year, which really is taking the piss (sorry...). I was just wondering what was happening re. rates rises/robbing councils in the rest of the country."
We should be outraged that local councils have managed to increase rates by more than twice the rate of inflation last year. The trouble is that we are not. We are too complacent and have allowed local authorities to blossom well beyond their original brief .

Let's face it, water reticulation, waste water, footpaths and roading are boring.
It doesn't help that those that are attracted to serve on local councils are excruciatingly boring as well. Cardigan wearing ex-school teachers, career administrators and socialist do-gooders that end up on local councils have little understanding of running a business.

Most of us "producers" are too busy working in our own businesses and ignore what councils are up to - until we receive the rates bill!

Over the years, motels throughout the country have endured general rate increases and the introduction of pan tax, capital rating, tourism tax, road user tax, CBD retail tax....the list goes on. Motels have been disproportionately targeted, seemingly based on a perceived ability to pay rather than actual use of goods and services.

The motel industry have a vested interest in the efficiencies of local government and needs to have a voice.

What should the motel industry be saying?

An underlying message that should be communicated to all councils is that a strong private business sector will underpin and sustain the general welfare of communities. In order to achieve this, councils should focus on minimising rates and regulatory burden. Businesses are the wealth-creating institutions of society.

Councils should only fund genuine public goods and services and facilitate the efficient provision of necessary infrastructure.

Councils should exit from all non-core activities.

Councils should be making a concerted effort to reduce business/private household rate differentials. This would address the anomaly of accommodation businesses charged differing differentials and businesses subsidising private households. Rates should be based on actual use, not on the perceived ability to pay.

The case for councils subsidising events, tourism promotion, attractions, conference and sports facilities must be supported by rigorous economic analysis that clearly demonstrates net benefits for all ratepayers.

There should be a concerted effort by councils to move funding of ‘club’ goods, such as swimming pools, recreation centres, libraries, museums, zoos etc to user charges.

Hopefully the distraction of debating the issue of mandated Maori representation can now be put behind us and a debate on core council services and fairer rate distribution can commence. Local government minister Rodney Hide has stated that "councils need to to focus on core activities, cull any luxuries and cap rates at the rate of inflation – or less." We agree!

Our industry leaders should be at the forefront of working with Hide to ensure that he follows through with his

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