Direct Debit Adjustments

There are 10,000 ratepayers accounts that Tararua District Council manages. About 46% of ratepayers use direct debit, avoiding penalties (unless their funds are insufficient).

Calculating direct debits (without rebates) is a straightforward process and we have electronic systems and processes to support this. However, between the 2017/2018 - 2023/2024 ratings years, direct debits for rebates processed throughout the year were excluded from this normal annual recalculation. This faulty process has occurred over the last six years.

Initially, the differences of “what was being paid” to “what should have been paid” were minor and so the problem of low direct debit amounts not covering arrears and current charges was not noticeable.

The reason it has taken so long to understand the scale and extent of the issue is that the direct debit recalculation process for rates rebates relies on human intervention without advanced computer tools. Once rebates are processed, staff then need to manually recalculate and adjust the individual direct debits. The process with each ratepayer account requires individual checks, transaction projections to enable direct debit recalculations and legal bank notices to be issued.

Over the past six years, the situation has become more complex through property sales, ownership changes, and ad-hoc agreements for payment that have corrected some individual direct debits. More complexity is added because every year the eligibility and rebate amounts may change. Individuals must re-apply for a rates rebate, and this may occur at any time throughout the year.

The error impacts those with direct debits who are also eligible for rates rebates, and now have a debit or credit balance because Council has not changed their direct debit amount.  Some ratepayers went into credit because they became eligible for a rates rebate, but the direct debit was not reduced. Rates have been set in compliance with the law, invoices correctly sent each year with accurate balances and the rates rebates have also been processed correctly.

The problem was not clear at first due to a lack of resources, analysis tools and suitable processes. The small revenue team were already stretched. When significant rate increases in 2023/24 widened the gap between what the direct debit should be and what it needed to be, the problem and the pattern became apparent.

We are deeply sorry for the error and acknowledge that discovering this faulty process will cause a lot of stress for all ratepayers. Council takes full responsibility.

The Chief Executive was alerted to the direct debit issue by a representative of one ratepayer in November 2023. This was considered to be a one-off incident. Then from February – April 2024, a handful of ratepayers raised a similar issue with their direct debits with elected members. That’s when the Mayor and the Chief Executive began to see a pattern and, in May 2024, dedicated a staff member to investigate the issue. From May – July 2024, a period which included large rates increases, the scale and extent of the issue became apparent, and it became clear up to 602 households were impacted. From August – September 2024, Council worked to understand their options to fix the problem and to minimise the financial burden for impacted households before making a public announcement.

With a plan in place, this is now being resourced and delivered following the first rates instalment for 2024/25, which had been delayed enabling the adoption of the Council’s 10-year long-term plan in August 2024.

While we acknowledge that this is Council’s error and ours alone, and we are deeply sorry for not changing your direct debit, by law, Council needs to recoup the money that is now in arrears. This is part of delivering a fair and equitable process for all ratepayers. No penalties or interest will be charged to rates that are in arrears because of our error.

To support impacted households, through our draft Rates Postponement Policy, we now propose that you won’t have to pay back the outstanding rates until such time the property ownership changes.

We will be consulting publicly on this policy 27 September – 20 October 2024.

Council will ensure it adheres to our privacy policies and your information will not be shared with anyone who does not need to know.

The LGRA provides for the ability of ratepayers to withhold their name and / or postal address from the rating database (section 28C).  The purpose of this is for when members of the public come to inspect the rating database at the Council office, which they have the right to do under section 28A of the Act. This means they are not able to see the personal information that ratepayers have requested be withheld.

The problem has occurred because our automated system for direct debits and our manual system for applying rebates have been out of sync. The two systems were not “talking to each other” very well.

It is important to note that the rates have been correctly calculated each year for all ratepayers, including those impacted by this error. The error occurred for some ratepayers when their direct debit was not recalculated each year when Council rates were set.

Council is responsible for processing rates rebates, readjusting direct debits and advising you of the adjusted direct debit amount based on rates owing.

Council will need to receive a completed rates rebate form before it can commence processing and submitting to the Department of Internal Affairs (DIA) for the rates rebate payment. Once your application is processed and lodged with DIA, Council will apply the rates rebate amount to your account. We do not wait for DIA approval. Only in instances where through DIA review the application is declined and amount changed, we will readjust your rates account and recalculate your DD amount.