Councils are being called on to follow central government’s lead and rein in spending after double-digit average rate rises this year by regional, district and city councils.
The average rate rise this year by New Zealand’s 11 regional councils was 16.20%, the third successive double-digit rate increase in a row. A survey by the Taxpayers Union has calculated the average increase for the 61 city an district councils was 14.18%.
Local Government Minister Simeon Brown said most New Zealanders and central government are prioritising the must-haves over the nice-to-haves, and local government should be adopting a similar approach.
“For the government, this means funding essential services and critical infrastructure,” he said.
“I expect local councils to adopt a similar approach, going line by line through their expenditure to ensure they are focused on core business.”
Brown recently announced the government is refocusing the purpose provisions in the Local Government Act, investigating the introduction of performance benchmarks for fundamental council roles and reviewing transparency and accountability rules.
It is also considering options such as cappng the amount councils can spend on what he called “nice-to-have pet projects.”
Previously it had announced changes that allowed councils to fund debt for infrastructure and the removal of references in the Act requiring councils to enhance the social, economic, environmental and cultural wellbeing in their communities.
Doug Leeder, the chair of Bay of Plenty Regional Council and Local Government NZ’s regional head, said nothing has changed in local government in 35 years – since reform in 1989 – and it is due for a relook.
“The local government sector in terms of its structure hasn’t changed since 1989 but we need to ask is that realistic in an ever-changing world?”
Such a discussion should be based on an unbiased, honest account of what amalgamation or reconfiguration would look like, with costings and the likely impact on ratepayers, and detail functions that are best handled at national, regional or local level.
“That’s the core of what, in my view, needs to happen.”
Federated Farmers board member and local government spokesperson Sandra Faulkner asks whether we are not in fact over-governed.
“Is it the rating model, or do we need three levels of governance in this country?”
Leeder said the reform of Three Waters and the previous government’s now sidelined Future of Local Government review, came close to initiating change, but he notes councils can already work together in area such as Three Waters.
Leeder sees opportunities for savings by councils sharing IT and roles such as building consent, roading and rubbish, but few do.
The previous government’s review found communities were not well-served by the relationship between central and local government and called for radical overhaul.
It made 17 recommendations, including the creation of a Crown department to manage the relationship, four-year local election terms, funding increases, and strong partnerships with iwi.
That report has been rejected by the current government.
The government has added to the workload of regional councils and in his own council, Leeder said, they have tried to spread the financial burden especially from targeted rates.
Ōpōtiki flood protection rates are approaching $1000/rateable property and in Tauranga the public transport rate was $300/rateable property before it was decided to provide a portion from the general rate.
This also recognises that people using public transport means fewer cars on the road, which aids climate change efforts.
The other significant increase in work has been flood protection, a costly exercise other councils also face.
Leeder said most of these schemes were originally paid for by taxpayers in the 1960s and ’70s but were passed onto councils with the local government reforms.
Calculating actual beneficiaries of this protection is complex and includes farmers, homeowners, businesses and public infrastructure.
The National-ACT coalition agreement commits the government to consider sharing a portion of GST collected on new residential builds with councils as an option for incentivising growth.
Leeder warned that this and other government revenue sharing could mean government seeking more of a say in council activities.
Federated Farmers’ Faulkner said given the differing populations, geography and needs, one model of governance may not necessarily suit provincial areas let alone all rural districts.
“What works in Gisborne does not necessarily work in Southland or the West Coast.
“That is the conversation that needs to be had in provincial NZ.
“It has to be locally led.”
The federation is in the process of developing an options document, which it wants to release ahead of next year’s local government elections.
Faulkner said the financial burden from inflation and sharp rate increases could prompt ratepayers to demand a closer look at our local government structure.
“The threat of rate rises, albeit necessary in many cases, could force discussion because people are feeling the pinch.”
Minister Brown said New Zealanders expect local governments to provide the frontline services they have been tasked with providing for decades, such as local roads, water services and infrastructure, and libraries.
Current high inflation means councils need to keep a close eye on expenses.
In addition to considering sharing GST on new residential builds, Brown said the government is also developing a strategic framework to support councils deliver infrastructure.
“As stated in the National-ACT coalition agreement, the government is considering sharing a portion of GST collected on new residential builds with councils as an option for incentivising growth,” Brown said.
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