We note that last week while we were on holiday, there were several reports in the media about councils targeting Bed and Breakfast businesses. Selected B and Bs that up until now have been paying domestic rates are being slapped with a commercial rate reclassification that will substantially increase their rates bill.
A predictable knee-jerk reaction from the motel industry has been: "good job!"
"Motel Association chief executive Michael Baines said he had talked to councils around the country about `bed and breakfast' operators not having to pay commercial rates and other charges related to health and safety which his members faced. "We've talked about some of the things that surround those levels of inequities. I applaud Porirua City Council for doing this. It's a recognition that B and Bs operating in their city are commercial entities."We note that several self-righteous local motel association branches have been devoting their energies into witch-hunting hapless B and B businesses and dobbing them in to local councils, demanding that they pay commercial rates. We say this is poor sportsmanship.
We do not feel comfortable with the simplistic argument from fellow moteliers demanding that another accommodation sector pay the same flawed rating structure as the majority of motel properties. We say that the argument needs to start at the broader inequities of local government that are unable to restrict activities to core services, restrain expenditure and effectively identify actual use of public goods and services by property owners.
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. Cardigan wearing council employees should be consistently reminded that businesses are the wealth-creating institutions of society.
Councils should be making a concerted effort to reduce business/private household rate differentials. This would address the anomaly of accommodation businesses being charged differing differentials and subsidising private households. Rates should be based on actual use, not on the perceived ability to pay.
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.
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. This would eliminate the need for targeted rates.
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.
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 has a vested interest in the efficiencies of local government and needs to identify and focus on more complex issues that have the greatest impact on its members. Dobbing in a few B and B owners may feel good, however this does not address the real issue of reducing the rating burden for motel businesses.
