Wellington Businesses Call for Amalgamation

Media Release
22 October 2008

Wellington Businesses Call for Amalgamation of Local Authorities

The Wellington Regional Chamber of Commerce has welcomed the drive by local government to cut costs and constrain rate increases in the face of tough economic times and suggested amalgamation should also be put on the agenda as a solution to the challenge.

“As part of its cost cutting exercise, councils should be thinking about local government amalgamation,” said Chamber CEO Charles Finny.

“In Wellington, we should be looking at one council replacing the existing 9 councils. The savings from council, mayoral and chief executive remuneration alone would be millions of dollars. The overall savings would be hundreds of millions. 79% of Wellington businesses in a recent Chamber survey support amalgamation.

“In addition to the savings from increased efficiencies and economies of scale that amalgamation would bring, there would be benefits from greater policy coordination. Some good work is already being done in this space. Waste disposal and building inspections are examples but more needs to be done.

“The Chamber is pleased with the local government initiative to look for areas where spending can be cut. We would be very pleased to help with this in the Wellington area.

“At this time of economic recession it is important that councils cut their cloth to suit their needs. Businesses can’t pass on higher costs and neither should the local government sector.

“We have been concerned about the rapid growth in the cost of many council activities as well as the size of the sector generally for some time and we believe councils should aim to keep population-adjusted rate increases below inflation.

“Inflation data released earlier this week showed that local authority rates have increased 51% in the last six years, compared with accumulated CPI inflation of only 19%. Average rate increases in the Wellington region are in excess of 5% (adjusted for population increases) for most authorities.

“To mitigate the potential for inefficient practices and wasteful expenditure, the
Chamber encourages more scrutiny of costs as well as a thorough and continual assessment of overheads and non-essential expenditure within councils’ operations.

“Rate-payers have been lead to believe that their rates go up when house prices rise and vice versa when they fall. Now that house prices are falling, they are getting a shock to find that this is not the case,” Mr Finny concluded.

ENDS

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