Direct Debit Adjustments

On Friday 20 September 2024, a letter was dropped in the mailbox of the 378 impacted ratepayers.  If you received a letter, you are a household impacted by this issue.  

There are currently 10 impacted households that Council hasn’t yet heard from. We have sent a follow up letter to those households.

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 (with 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. Those impacted 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 their 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.

From late 2018, recalculations for direct debits were managed on a case-by-case basis by the revenue team, rather than addressed systematically. COVID-19 in 2020 further affected the team’s operational capacity. Over time, some rate balances were cleared as properties sold, and some ratepayers have had their direct debits payments changed by agreement.

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.

Council has already taken action to prevent this error occurring again in the future and we expect that further actions may be taken based on the outcome of the results of an independent external investigation due in December 2024.

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.

If you decide to postpone your rates arrears, you won’t have to repay back any of your arrears until such time your property changes ownership. What we do ask is that you start paying rates at the correct amount so that you don’t fall further behind. We recognise that paying the 2024/25 rates will be quite difficult for many impacted households, because of how much the rates have had to increase in the last two ratings years. It’s why we have a pathway in place to support you to understand your individual situation. We will be working with you to find a tailored solution that works best for your circumstances.

The important consideration here is that Council is legally obligated to set rates in accordance with the Local Government Rating Act 2002 (LGRA). It is also Council’s obligation to collect rates that are due. To deliver a fair and equitable process, Council must ensure that ratepayers are rated in accordance with Council’s policies and pay their share of the rates for the services we deliver to our community.

The LGRA provides Council with relevant tools to help it meet its obligation to collect rates due.  Council’s rates invoice issued is correct and therefore, Council needs to exhaust all avenues to collect rates. We know the rates postponement option best meets the outcomes Council is seeking to achieve.

Yes, you can. You can also repay part or all the amount that you postpone at any time.

Council acknowledges that it is our error that has caused this issue. It is the direct debit amount for those who have received rates rebates that was not adjusted to correctly reflect the rates owed. However, Council has set the rates correctly. In accordance with the LGA, LGRA and Council policies, it is Council’s obligation to collect rates due.

You are welcome to bring a support person, family member, friend or any representative to any meetings. Government agencies have been alerted to the issue and, throughout the district, support organisations are also aware of the issue to help you navigate what we acknowledge is an extremely stressful time.

We encourage you to contact your iwi, Greypower, WINZ local offices, Probus, REAP, Tararua Family Services and your place of worship.

No. We have not charged any interest for the amount outstanding due to the error and we will not be charging any interest if you choose to use the rates postponement policy or repay your rates over multiple years.

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. We have also correctly applied your rates rebate each year and this error has not affected your eligibility to receive the rates rebate. The error occurred for some ratepayers when their direct debit was not recalculated each year when Council rates were set.

You will be able to decide if you want a refund or to apply part, or all, of the credit towards your rates. Our focus is to find a tailored solution that works for your situation. We will follow up with you with phone calls. Once we have worked together to find a suitable solution, our contact care team will work with you to action the refund or apply a credit to your rates.

We will process all the requests for refunds once we have finalised your new direct debit amount. The new direct debit amount will be reflected in the letter and effective 30 days from the letter.

You can choose one of these options - either refund the credit or apply part or all of the credit towards your rates.

Once we have decided on the new direct debit amount, we will process your credit and you will have the option of cancelling future direct debit payments, if that is your preferred option.

We are doing a full and thorough investigation to find out how this faulty process occurred and was able to continue and to put a robust process in place to make sure the error can never happen again in the future.

Yes you can. We do the direct debit adjustment yearly (in September) but you can change the amount during the year. Contact our rates team at 06 374 4080 or email Rates@Tararuadc.govt.nz to request a change to your direct debit amount.

We want to make sure we can work with you to find a tailored solution that works for your situation. To get an accurate calculation of your direct debit payment if your rates need to change, please phone our team on 06 374 4080 or 06 376 0100 or email us info@tararuadc.govt.nz You can also make contact via letter or in person at our service centres.

A Council representative will be able to review your account and provide a clear outline of what is owing and the direct debit payment for your specific circumstances.

We want to make sure we can work with you to find a tailored solution that works for your situation. To get an accurate calculation of your direct debit payment if you want to make payment towards your arrears, please phone our team on 06 374 4080 or 06 376 0100 or email us info@tararuadc.govt.nz You can also make contact via letter or in person at our service centres.

A Council representative will be able to review your account and provide a clear outline of what is owing and the direct debit payment for your specific circumstances.