MEDIA RELEASE

Let’s get the facts straight on local government
For immediate release on 30 April 2009

“Business lobby groups should spend their time ensuring their members can survive in a recession rather than misrepresenting local government”.

The Chief Executive of Local Government New Zealand Eugene Bowen said this today in response to a statement by the self-titled Local Government Forum.

“Despite its name, the Local Government Forum is a business and farming lobby promoting a minimalist role for local government that is at odds with community feedback and preferences.

“The Forum does not understand, and shows no great inclination to understand, how local government works. Otherwise it would know that councils are not just about the provision of public goods but have a legislated role in improving the well-being of their communities.

“Councils have an open and transparent role in setting rates. Rates are not set in isolation but are set after a large amount of discussion and consultation with communities.

“When preparing their plans councils will address questions as: the rationale for undertaking each activity, what the benefits from each activity are, how activities should be funded and the how the funding sources will impact on the different communities.

“Part of this planning will include developing their communities’ economic well-being. Councils create and maintain the assets that businesses rely on, from roads to bridges, from community centres to events and facilities which help stimulate local products and services,” said Mr. Bowen.

The Government’s analysis of the 2006-2016 LTCCPs noted that councils planned to spend approximately $31 billion on capital investments over this period. Of that total 75 percent is committed to network infrastructure, such as roads, drains and pipes. Most of the rest is committed to community infrastructure, such as halls and libraries.

“The suggestion that councils and councillors fail to approach their spending in a disciplined manner does not stand up to scrutiny, and rigorous scrutiny is applied by the Office of the Auditor General.

“Most councils are very aware of the political consequences of rates increases. Councils only increase rates after thorough consideration of the consequences of, for instance, not fully funding core infrastructure, or not meeting community expectations about recreation or safety. Councils are fully aware that those who increase rates too far are the ones who suffer at the elections.

“Rates for some are the only source through which councils can raise capital for investment in infrastructure. If the community needs a new park or sewerage system, this often has to be funded through an increase in rates. It is like a household needing to find money, beyond regular living expenses, to replace the roof.

“The cost drivers for local government expenditure are typically higher than the consumer rate of inflation. Roading and constructions costs have tended to increase more than the CPI measured rate of inflation. Rates cover both present and future funding needs, and in some cases are also catching up on past under-investment.

“For all these reasons it is neither practical, nor beneficial to communities, to manage rates within nationally-imposed constraints which cannot capture or respond to the range of councils' needs and resources.” said Mr. Bowen.

ENDS

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