Council Funding Not The Core Of The Problem

Calls by metropolitan mayors for new funding tools for local government would address only part of the problem facing local authorities and their ratepayers, said the Chair of the Local Government Forum, Don Nicolson[1].

Mr Nicolson was commenting on a media statement by Bob Harvey, chairperson of a recent meeting of metropolitan mayors held to discuss local government funding. Mr Harvey had said a new range of funding sources was needed for a local government sector struggling to cope with the demands of population growth, devolution of functions from central to local government, growing community expectations and new local government functions and services. Mr Harvey made the plea that “we simply cannot survive on rates alone”.

“The business community will be relieved that the local government sector realises that it cannot keep coming to ratepayers every year for large rates increases”, said Mr Nicolson.

“Total rates revenue increased 7.3% for the year ended June 2004 and by June 2004 rates revenue was 25% higher than for the year ended June 2000[2]. Furthermore, council long-term plans point to further large increases in the years ahead as councils look to fund further projected increases in expenditure.

Mr Nicolson observed that while a rigorous and comprehensive review of local government funding is much needed, the business community will be disappointed that the joint local and central government review currently underway has not sought the input of ratepayers. That simply isn’t good enough.

“Nor would it be good enough for the review to ignore the drivers behind the perceived need for more money. The new Local Government Act has given councils more discretion and central government is using it to offload its own responsibilities to local government. Too much of the new spending provides inadequate value for money. It is no surprise that rates have increased so much in the year after the Act came into force.

“There is a desperate need at this time for local authorities to be focused on the basics – the provision of services at a local level that cannot or will not be provided by the private sector. If the present Local Government Act cannot provide this direction, then we need to change it.

“In short, the review on local government funding should seek to address the root causes of the problem, not just seek new ways to extract more and more money,” concluded Mr Nicolson.

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