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22 July 06
Reigning in Local Government

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This week, at the opening of the Local Government New Zealand conference, the President, Basil Morrison, raised concerns about local government funding: “One issue that continues to affect all councils, and one that I think we’re all united on is funding.  How do we continue to fund the expectations of our communities, restore, maintain and develop our infrastructure and respond to the increasing costs of compliance created by central government, when our funding base is so narrow”.

With council rate increases around the country expected to be in the region of 60 percent over the next decade, with some areas anticipating rises of over 100 percent, the question of who funds the escalating cost of local government is a very important one. But while the Labour Government is responsible for creating the cost avalanch, the Prime Minister has stated that the Government is not promising councils any more money, and has dismissed complaints that local authorities face extra costs because of new laws, saying that most of those costs can be recovered.

It is now over four and a half years since the 2002 Local Government Amendment Bill passed its third reading in Parliament. During a marathon thirty-hour debate on the 1,000-clause bill, the government was warned that the bill would cause a dramatic escalation in the cost of local government, through massive increases in bureaucracy, planning and consultation, without producing one single additional ratepayer service. Claims were made that the new law would lead to local government ‘democracy’ being replaced by ‘bureaucracy’, with staff and lawyers gradually taking over the decision-making process. Further, there were warnings that the introduction of a range of ‘special’ privileges for Maori would create a divisive race-based role for local government.

The 2002 amendments re-defined the purpose of local government, away from the traditional role of providing public good facilities (like libraries, pools and parks), delivering core services (such as water, sewerage, rubbish, and roading ), and issuing and monitoring consents, to one that has a responsibility to “promote the social, economic, environmental, and cultural well-being of communities, in the present and for the future”.

Along with the need to advance these four well-beings, local authorities were given sweeping new powers of general competence. These new powers were to enable councils to establish and operate commercial ventures, underwritten by ratepayers and in competition with the private sector. But while the powers provided were similar to those that apply in the commercial sector, local government remains unconstrained by the commercial imperatives that drive private sector success, such as operational efficiency, cost restraints, customer satisfaction, CEO accountability and so on.

The futility of long-term planning, a key hallmark of the new legislation, was raised during the Parliamentary debate, whereby scarce ratepayer resources can be allocated into areas like disaster planning for calamities that not only are unlikely to ever happen, but in cases like global warming - where some councils are preparing to erect signs on beaches warning against sea-level rises - have not even been scientifically proven!

Four years on, and the dire predictions raised in Parliament on December 17, 2002 have now come to pass: local government costs are rising, council debt is escalating, and ratepayers are facing massive rates increases. Implementing the four well-beings has also opened a Pandoras Box of ideological agendas that have now been released onto local government. As a result, some councils are literally spending hundreds of thousands of dollars of ratepayers’ money on extreme environmental protection regulations that are undermining property rights and hampering progress.

Just this week, Charlie Pedersen, the President of Federated Farmers warned delegates at their annual conference about the danger that radical environmentalism, which he likens to a new religion, poses for the future. Charlie is our NZCPD guest commentator this week and the full transcript of his speech can be viewed on the website by clicking here View >>> .

While central government has passed onto local government the cost of implementing and administering new laws involving prostitutes, gambling, buildings and dogs, the decision on whether or not to adopt a range of Labour’s other initiatives is voluntary. That means that councils are not compelled to become involved in economic development, waste minimisation, migrant resettlement, positive aging, lifting water quality standards, developing arts and culture strategies, or anything else, unless they want to.

From a ratepayer perspective Labour’s local government reforms are a disaster: while local government bureaucracy is bigger, the potholes still aren’t being fixed, the streets are still not safe, consents are taking longer and are more expensive, and the strangulation of land supply - through excessive regulation, high compliance costs, especially associated with the Resource Management Act, and unreasonable development levies – is now threatening housing affordability.

With ratepayers feeling increasingly powerless, surely it is time return local government – a $3 billion business, with ratepayer assets of over $30 billion – back to its core role. This can be achieved by repealing the 2002 Act and re-directing councils back to the provision of infrastructure, services and consents.

It is also surely time that cash-strapped provincial councils looked at following the lead of Gisbourne, Nelson and Marlborough in combining the functions of their district and regional councils into unitary authorities. Further, with many councils using over half of their rates to fund local roads, the government should be asked to justify why local roads are funded differently from major roads, given that we all contribute to petrol taxes and road user charges. If a strong case is made for central government to pick up the responsibility for the funding of all roads from motorists’ taxes, rates in many areas could be halved!

To protect ratepayers from exploitation by spendthrift councils, a rates cap should be introduced whereby rate increases are capped at the rate of inflation, with an annual population adjustment And to ensure the participation of all ratepayers and residents in the decision-making process, binding public referenda should be used as a matter of course for all major controversial issues in order to strengthen local government democracy and ensure that councils continue to listen to the wishes of their ratepayers.

The poll this week: Do you agree with the changes to local government introduced in 2002 by Labour? To take part in our online poll >>>  Further, if you are interested in helping to reform local government I would urge you to sign up for the NZCPD Local Government Campaign on the website – promoting a Ratepayer Bill of Rights - indicating in particular whether you would be prepared to take a lead in your area (click here to view >>>). If you support the concept, please encourage others to sign up for the campaign and I will be in touch with everyone shortly.

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