Forestry leaders say 1260% rates hike puts jobs at risk

Carterton forestry owners are facing a 13-fold increase in council rates under a proposal currently out for consultation.

By Emily Ireland for Local Democracy Reporting

It’s a move leaders in the forestry sector say threatens the viability of forestry businesses, and puts jobs and the rural economy at risk.

Carterton District Council was currently consulting on an overhaul of its revenue and financing policy, which included introducing a targeted roading rate and increasing the rural differential from 0.8 to 1.0 (the amount rural ratepayers pay compared to household and commercial rates).

The proposed targeted roading rate sought to collect roading revenue from ratepayers in a more proportionate way, following an assessment commissioned by the three Wairarapa councils.

The assessment found dairy, forestry and pastoral farming collectively made up more than 68% of Carterton District Council-funded, non-weather related, roading costs in the Wairarapa town.

But on October 13, the council confirmed that the modelling it used, provided by Australasian advisory firm Morrison Low, contained an error.

Previously the average increase for forestry was signalled to be about 800% and now it was 1260%.

Under the corrected calculation, the average forestry operator faced a rates increase from $2825 to $38,391.

Dairy farms faced average increases of 92%, and residential and lifestyle ratepayers faced decreases of 14%.

The New Zealand Forest Owners Association said the correction shifted an even greater share of roading costs onto forestry.

Forest Owners Association chief operating officer Joseph Brolly said forest owners were being asked to shoulder an extraordinary financial burden.

“Forest owners were already facing rates increases of tens of thousands of dollars a year more in some cases,” he said.

“For a medium-sized 300-hectare forest, the proposed increase would take annual rates from $8,700 to $107,700 – more than 12 times the current bill.

“Now the council has acknowledged a modelling error that could make that situation even worse.”

He said increases of this magnitude threatened the viability of all forestry businesses and “put at risk the jobs, local spending and economic activity they support in rural communities”.

Consultation had been extended to October 26 to allow for additional time to consider the updated information, including the independent peer review, which was available on the council website.

But Brolly called on the council to extend this further and said forest owners should have a fair opportunity to understand and respond to the revised modelling.

Carterton Mayor Steve Cretney said the council would consider all feedback received through the consultation process before making any decisions.

“We're listening, we're learning, and we're prepared to make changes where the evidence supports them.”

Cretney said there was no rating system that everyone considered fair.

“The purpose of this review is to test whether there is a clearer, more transparent and more appropriate way to share costs than the system we use today. Council engaged Infometrics to undertake an independent peer review which concluded the modelling and report follows best practice for apportioning roading costs to land use categories,” he said.

Council-funded roading costs were currently shared across all ratepayers based on the capital value of properties.

At the time the proposal was discussed by councillors, Cretney said it raised the question of whether forestry would continue to be a viable industry if companies paid for roading costs through a targeted rate.

Councillor Steve Laurence said the flip side was that “granny down the road has been subsidising international forestry companies for such a long time”.

In a statement, Juken New Zealand chief forest officer Sean McBride said the proposed rates failed to adequately reflect the long-term nature of forestry and existing contributions to road funding from the sector.

“Forestry, like any major road user, has a responsibility to contribute to maintaining local roading infrastructure, particularly during harvest,” he said.

“Log trucks already pay road user charges to contribute to the wider funding of the roading network.

“But forests can go decades without generating logging traffic, while owners face rates bills every year.

“Increases of this magnitude will make it harder to justify investing in forestry in the district.”

– Local Democracy Reporting is local body journalism funded by RNZ and NZ on Air