Rates rebate update

We have completed our survey to find out more about the way rates are allocated within retirement villages. 63 villages replied, representing 53% of the “licence to occupy” category of dwelling units, which are the ones typically excluded from the scheme as the residents are not the “named ratepayers” on the rates demand yet have a capital interest in their homes.

Extrapolating that information to the full RVA membership we find that rates are split between residents and other commercial activities:

	Metropolitan city councils 1	Provincial TLAs 2	Rural districts 3
Total rates 4 paid by villages	$6.38 million	$6.39 million	$1.76 million
Total rates paid by residents	$5.38 million	$5.38 million	$1.39 million
Weighted average per dwelling unit per week	$19.07	$19.27	$15.29

1. Auckland, Wellington, Christchurch regions and respective councils
2. Hamilton, Whangarei, Napier-Hastings, etc
3. Predominately rural councils such as Far North DC, Waikato DC, etc.
4. Total TLA, Regional Council and water rates (where applicable)

The difference between the total rates bill and the share paid by the residents is due to rates assessed on land held for development or is used for other commercial purposes (usually a rest home or hospital). This amount is paid by the village operator directly and is not charged to residents.

Retirement village operators do not keep any records about residents’ income. However, the Retirement Commissioner undertook a survey of retirement villages and their residents in December 2006 and found that 24% of residents have only their NZ Superannuation to live on, while 37% live “mostly” on their NZ Superannuation.

Question 60 of this survey provides a little more information:

Annual income before tax	All residents	Under 85 years of age	Over 85 years of age
$0 - $15,000	12%	15%	7%
15,001 – 20,000	28%	26%	33%
20,001 – 25,000	15%	18%	9%
25,001 – 30,000	3%	3%	3%
30,001 – 35,000	4%	5%	1%
35,001 – 40,000	2%	3%	1%
40,001 – 50,000	5%	5%	4%
50,001 – 70,000	2%	-	6%
70,001 – 100,000	-	-	-
100,001 +	-	-	-
Refused	11%	8%	15%
Don’t know	17%	15%	19%

There are approximately 20,000 residents living in RVA member villages throughout New Zealand. Based on these figures, approximately 8,000 people would qualify for the full $530 annual rates rebate while up to 3,000 people would qualify for some of the rebate, depending on their income level.

The total rebate paid to income-qualifying retirement village residents could be about $5.83 million annually.

We have spoken to a number of operators about option 2 in the DIA’s original paper (i.e. residents complete an application form which is collected by the operator and forwarded to the DIA for approval, and the rebate is then paid to the operator who credits the eligible residents’ accounts) and they are relaxed about the process proposed. No-one expects this to be onerous but they are happy to do it if the eligible residents are able to get some financial relief. Running the scheme would be merely part of the overall village administration and a marginal cost at most.

At this stage we have:

1. Briefed key MPs on the survey outcome to encourage them to include the matter in their election policies.
2. Written to the DIA with the findings of the survey
3. Written to Grey Power and Age Concern to bring them up to date with the survey’s findings and to elicit their support (which has been very forthcoming).

Since there needs to be a law change to effect the policy, we are now talking to the new government about this issue.

Replies are now coming in from the politicians about extending the rates rebate to retirement village residents. Both NZ First and the Greens have given a commitment to extend the rebate; an email from the Greens states:

The Green Party agrees that the current situation is anomalous, and supports the recommendation that the rates rebate scheme be extended to retirement village residents. We can see no reason, if we are part of the Government following the election, that this could not be progressed rapidly under a timetable to have legislation in place for commencement in the 2009-10 financial year.