Independent Inquiry into Local Government Rates

TERMS OF REFERENCE

Purpose

1. To provide an independent assessment of New Zealand's local government rating system and identify options to enhance rates as a funding tool for local authorities.

Context

2. The Inquiry has arisen as a consequence of public concern in light of financial and rates projections outlined in Long-term Council Community Plans and confirmed in local authority rating decisions during the June-August 2006 period. 3. The Government has announced the establishment of an independent inquiry to provide the public, key stakeholders and the local government sector with a mechanism to outline issues relating to the local government rating system and suggest options to address these issues.

Objective

4. To consider issues relating to current local government rating, and to other revenue raising mechanisms, and provide recommendations to the Government for enhancing rating and other funding mechanisms for local authorities.

Tasks

5. The tasks associated with the inquiry will include:

(a) Examine the level of rates, level of rates increases and trends in the use of rating tools nationally to fund services, as well as other sources of revenue currently available to local authorities;

(b) Consider the phase one and phase two reports of the Local Authority Funding Project, their recommendations and implications for the future of rates;

(c) Develop an understanding of the drivers for local authority expenditure, including, growth, the age and state of infrastructure (eg public transport, roading, water and wastewater), requirements of 'higher standards' (eg water quality) and other infrastructural demands on both capital and operating expenditure needs;

(d) Examine the sustainability of rates as the major revenue raising tool, having regard to affordability issues for communities, groups within communities, and individuals, particularly those on fixed incomes;

(e) Examine the impact of rates on land covered by the Te Ture Whenua Maori Act 1993;

(f) Examine the impact of the new Rates Rebate Scheme (and other government assistance packages for families) and local authority rates remission and postponement policies;

(g) Examine the impact and ongoing need for existing exemptions from liability for rates, including Crown exemptions from liability for rates; and (h) Provide a report by 31 July 2007 on (a)-(g) above along with recommendations to enhance rating and funding mechanisms for local authorities.

Submissions

6. It is expected that the inquiry will invite written submissions on an open basis and hear oral submissions from key sector groups identified by the inquiry.

Assumptions

7. The inquiry is not a review of the system of local government per se, and in particular of:

· the purpose, autonomy, or structure of local government; or · the principles of democracy, transparency, equity and accountability that local government operates under. Key personnel

Inquiry appointments

Three members are to be appointed to the inquiry.

Inquiry Convenor The skills and attributes required by the inquiry convenor will include:

a. experience of and track record in assessing complex information and resolution of conflicting interests;

b. to be seen to be sufficiently distanced from both local and central government as well as any particular party to be seen as impartial and unbiased (ie cannot have a record of advocacy for any particular position vis-à-vis local government funding);

c. to have the confidence of the general public as well as local and central government;

d. to have demonstrated leadership capability to be able to create a focussed team of fellow reviewers advisors and support staff;

e. sophisticated communication skills in both written and spoken language; and

f. to be sensitive to the unique position of Maori with respect to property ownership.

Skills and attributes required by the inquiry panel The range of skills/knowledge to be represented on the panel will include:

· knowledge of the system of local government, the application of rating systems and the relationship between local authorities and their communities; · knowledge of taxation and financial management/governance issues; · a detailed understanding of central Government administrative systems; and · understanding of local government's role in contributing to both local community wellbeing and broader national outcomes.

Administrative support

The Department of Internal Affairs will provide administrative support to the inquiry.

Inquiry Advisors

The panel shall appoint such advisors it believes are necessary to support the inquiry.

ENDS

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