By Linda O’Reilly, Special Counsel, Tompkins Wake.
A recent report on the use of the Local Government (Rating of Whenua Maori) Amendment Act 2021 to successfully relieve a landowner of an overwhelming historic rates burden has brought this piece of legislation to mind.
As one of the few areas of local government legislation reform introduced by the previous government that is not (yet) under attack, it is worth taking a look at the provisions now written into in the Local Government (Rating) Act 2002 (LGRA).
The collection of rates on under-utilised Maori land has long been a source of frustration to local authorities, as has the rating burden on the owners and occupiers of such land. In fact, the rating burden has been, to some extent, both the reason for the lack of productive development of such land and for the resulting inability to pay the rates. This legislation does not resolve those issues, but it does offer some redress.
To make clear the intent of these provisions, the LGRA was given an added purpose to: “facilitate the administration of rates in a manner that supports the principles set out in the Preamble to Te Ture Whenua Maori Act 1993.”
The principles referred to include the following (English version): “ And whereas it is desirable to recognise that land is a taonga tuku iho of special significance to Maori people and, for that reason, to promote the retention of that land in the hands of its owners, their whanau, and their hapu, and to protect wahi tapu: and to facilitate the occupation, development, and utilisation of that land for the benefit of its owners, their whanau, and their hapu:” [Emphasis added.]
Relevant revenue and financing policies and policies for the remission and postponement of rates must be reviewed for compliance with the Preamble.
The former Minister of Local Government was making it clear that the administration of the rating system by local authorities should protect the retention of Maori land by Maori and facilitate its beneficial use for Maori.
To that end, the chief executive of a local authority must now write off outstanding rates that, in their opinion, cannot reasonably be recovered. A ratepayer can apply for such a write off or the chief executive can act on their own initiative.
In addition, a chief executive may write off all or part of the outstanding rates on Maori freehold land that would otherwise be payable by a beneficiary of the deceased owner of that land. As of 1 July 2021 local authorities were required to write off rates arrears on unused Maori freehold land subject to a Nga Whenua Rahui kawenata (an agreement with the Crown to protect Maori land under the Nga Whenua Rahui funding programme).
Special provision was made for Maori freehold land under development or intended for development. If the development meets criteria relating to district benefits (employment, new homes, increasing long-term rating base), benefits to Maori (supporting marae), or benefits the owners by facilitating occupation, development, and utilisation of the land, an application can be made to remit the whole or part of the rates for the development period.
Another useful provision allows a person actually using 2 or more rating units of Maori freehold land to apply for that land to be treated as a single unit for rating purposes if those units are used jointly and likely to have been derived from the same original block of Maori freehold land. This has the advantage that only a single uniform annual general charge is payable.
The Amendment also gave some helpful clarity to the provisions in the LGRA for the collection of rates on Maori freehold land by creating a new class of ratepayers and providing the ability to divide a ‘separate rating area’ from a rating unit.
Where part of a rating unit comprises a dwelling and is used separately from the other land in the rating unit, a local authority must on request of a trustee or a person actually using the identified part, determine it to be a separate rating area.
Rates for the underlying rating unit are then apportioned between each separate rating area and any residual rating area on the basis set out in the LGRA. The definition of a ratepayer now includes any person named in the rating information database as the ratepayer for a separate rating area, and that person is liable for the rates on that separate rating area. A separate rates assessment is issued for each such area.
Where land has ceased to be Maori land, but is beneficially owned by descendants of the persons who beneficially owned the land before it ceased to be Maori land, local authorities now have authority to collect rates outstanding for three years or more from a person actually using the land.
This provision only applies where the owner of the land is unknown, untraceable, deceased, or has formally abandoned the land. This is not an uncommon scenario in rural areas and at least allows some possibility of rates recovery.
While the Amendment did not wholly please either the owners of Maori freehold land or local authorities, it does offer a smidgen of relief to the former and some improvement to the collection process for the latter.