Paying our last respects

01:08, Oct 03 2013

Profit margins on funerals are being squeezed as Kiwis become sensitive to rising costs.

Invocare, a listed Australian funeral services operator with extensive operations in New Zealand, told investors last month that the New Zealand market is becoming more price sensitive and customers here were increasingly buying lower cost funeral packages and services.

That Kiwis are price conscious is not surprising as one of the key elements of the cost of a funeral, the cost of burial and ashes plots in mostly council-run cemeteries, has been rising, often faster than inflation.

In March 2008, this paper did a survey of the price of such plots. Revisiting that data five years later it is clear that costs have continued to increase, most notably for burial plots.

Price rises of 60 per cent to 80 per cent, and sometimes higher were recorded in places such as Auckland, Tauranga, New Plymouth, Hamilton and Dunedin. Christchurch City Council has not lifted plot prices and rises in Nelson and Wellington were modest.

Local Government New Zealand (LGNZ) said price increases have probably been driven by factors including councils seeking to reduce the rates subsidies that go into cemetery upkeep.


"Most, if not all, public cemeteries in New Zealand have a ratepayer subsidy," it said. "These may be as high as 75 per cent of the cost to around a third or half the cost in major cities. Fees are generally set to cover direct costs such as preparation of burial plots with maintenance funded from rates. If councils charged the full cost - which for them includes depreciation, possibly the cost of capital, ongoing maintenance and improvements - it would be prohibitively expensive.

"The critical question facing councils is whether the cost of cemeteries should be fully met by those who have family members buried in the cemeteries or whether there is a wider community benefit that justifies an ongoing subsidy. In addition, there are a large number of heritage cemeteries, and cemeteries which are full, where there is no alternative but to fund upkeep from general funds, as over time income declines but maintenance costs stay the same or increase."

Cemeteries allow people to buy plots before they need them. Given the price hikes, anyone with the foresight to have bought a plot a few years back will have saved their estate a pretty penny.

Plots are transferable on payment of a fee, so theoretically someone could buy one, then onsell it for a profit. Nelson City Council charges $100 for transferring an interest in one of its plots. Christchurch City Council charges just $27.

But the cost of the plot is not the only burial cost to have risen - there have been big jumps in many places for grave-digging.

Take Tauranga. Back in 2008 it charged $490. Today it is $660. Christchurch City Council charged $537 to bury an adult. Now it charges $915. At Manukau Memorial Gardens the interment fee has risen from $711 to $1061.

Burial often costs more than that, as there can be a whole raft of other fees including fees to be buried outside normal office hours, fees for big holes for big people ($277 for "oversize caskets" in Manukau Memorial Gardens, for example), and permits for headstones ($70.70 at Dunedin City Council cemeteries).

There is often a charge for out-of-towners. For example, someone wanting to be buried in Palmerston North, possibly because they were born there, has to pay an extra $506 if they were normally resident outside the district when they died so did not pay rates to Palmerston North District Council.

At Wellington's Karori Cemetery out-of-towners pay an extra $913. In sunny Nelson it is $1150.

Ashes plots are much cheaper, but have also undergone large price increases in some areas. An ashes plot in Palmerston North costs between $573 and $641, compared to a burial plot of between $1710 and $2528.

Interment fees for ashes are also significantly cheaper, $150 in Nelson compared to $700 to put a coffin in the ground. Scattering ashes inside a cemetery draws a modest fee ($60 in Palmerston North, for example), and scattering them outside is free.

It is estimated that more than 70 per cent of people are now opting for cremation, and it is tempting to believe price is one of the driving factors.

Funeral Directors Association vice-president Gavin Murphy said there was a growing market for "direct cremation", where people pay to have their loved one cremated, but manage the rest themselves.

Murphy said members were not reporting people struggling to pay for funerals. "There are shifts," he said. "There is an increase in direct cremation. People are having a memorial service at a later date."'

While "direct cremations" have been generally delivered by funeral parlours, internet-only funeral parlours specialising in cremation are now here with the launch six weeks ago of Souly Cremations with costs starting from $1795 to have a loved one picked up, cremated and the ashes returned.

Aleisha Morris, manager at Souly Cremations, said the service was launched in response to demand for cost-efficient cremations for families wanting to handle ceremonies themselves.

"Families are definitely looking for cheaper options," Morris said. "People who have had a traditional funeral can easily spend $8000 to $10,000."

Many don't want to spend that amount of money and find other options are more suited to their family culture.

"They might have something at home like a barbecue where they do everything themselves and the family can celebrate the deceased," she said.

But cost consciousness is only one part of the changing culture of death. An ageing population - which makes death a boom industry - and our transient lifestyles and global mobility are playing a part.

"Quite often it is not even about the costs," said State of Grace mortician Fran Mitchell. "It is just that somebody is really old, and the family does not think there will be many people to come to the funeral."

In such cases it makes more sense to have a smaller, more intimate, family gathering.

"A lot of families are now spread around the world so people can't get together in a few days," Mitchell said. Instead ceremonies may wait until times such as Christmas when families are together.

Our generation is unlikely to leave a legacy of splendid, ornate graveyards with family crypts and life-sized angels imploring heaven, with weakening demand for permanent memorials.

Ganesh Cherian, owner of Glover Memorials, said: "Our business is fairly static in that there is a rise in the number of people dying, but because more people are being cremated, we don't do more memorials."

Council-run cemeteries have strict limitations on memorial sizes, most limiting their height to just a metre, he said. Waikumete Cemetery in the west of Auckland does allow mausoleums to be built, but mausoleum plots come at a steep $34,133.

There is also a sense that people want to celebrate lives in less formal locations and ways.

Mitchell said New Zealanders are much more aware that they can, providing health and safety laws are followed, organise things the way they want rather than following a traditional pattern.

But councils have not kept up with society, Mitchell believes. Many desire eco-funerals, but the traditional cemetery model does not yet cater for that in many parts of the country. "That's really disappointing," she said.

Sunday Star Times