A Gisborne district councillor has questioned whether writing off more than $770,000 in unpaid rates can be avoided.
If rates have gone unpaid for six years, during which time collection through the court system is unsuccessful, the council must write it off as "bad debt". Photo: LDR / Supplied
If rates have gone unpaid for six years, during which time collection through the court system is unsuccessful, the council must write it off as "bad debt".
Councils are legally barred from starting court action to collect payments beyond that six-year mark.
Unpaid rates from the 2015/16 year totalled $773,000 and will be written off in the 2020/21 year.
Of that figure, $640,000 is from Māori freehold land - which can include land that had no title, is unoccupied, or where there is difficulty contacting the multiple "fragmented" owners.
At a finance and performance committee meeting last week, chief financial officer Pauline Foreman said unpaid rates equated to about 1.25 percent of the total rates income.
"Our council and Far North have the highest write-offs, thereafter there would be minor amounts," she said when asked how Gisborne compared with other councils.
Last year, $668,000 in unpaid rates was written off.
Councillor Tony Robinson said the council shouldn't be writing off "three-quarters of a million dollars of rates" every year.
He questioned staff about tools to enable them to collect rates beyond that six-year mark.
"Business as usual is not working properly. There are so many tools available to us. It's a lot of money that could be going back into our community."
Robinson suggested that when unpaid rates were coming up to the six-year mark, the council "postpone" the rates to allow further collection time.
A paper before the committee said ratepayers who were struggling financially were encouraged to come to a payment arrangement, where possible, or to apply for hardship if there were insufficient funds for day-to-day living after paying rates.
The council's debt collection practices include payment plans, proceedings taken against the mortgage, legal proceedings on properties without a mortgage and referring the debt to an external collection agency.
Staff said they tended to make payment arrangements that saw people clear rates within a one-to-two-year period, rather than using rates postponement.
As of March 2021, the council was owed $9.1 million in rates debt, of which $6.4m was from Māori freehold land.
The paper acknowledged the "complex issues" around rating Māori freehold land, including land that had no certificate of title, was unoccupied, or where there might be difficulties in contacting multiple owners.
On 12 April, the Local Government (Rating of Whenua Māori) Amendment Act was enacted.
The Act makes changes to the rating of Māori land, looking to reduce the barriers for effective partnership between local government and Māori, and encourage and modernise the rating legislation.
Some changes took effect immediately, while others will come into effect on 1 July.
The council will review its rates remission policies for Māori land later this year and take into account changes to the Act.
Council revenue team leader Fiona Scragg said trusts on Māori land had to pay rates to the extent of money generated from the land. That meant no money, no rates.
"With these properties that will be developing... this will come up when we look at the remissions to help with how we can encourage development," Scragg said.
"After that, once they come into production, yes, there would be some return off the land and we would expect there would be rates being paid."
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