Feds optimistic about local government review

The thoroughness of an issues paper released today on local government funding and financing is cause for optimism, Federated Farmers President Katie Milne says.

"The Productivity Commission’s paper sets out key topics as it investigates what drives local government costs now and into the foreseeable future, and invites people to comment on the shortcomings of current systems, as well as suggest alternatives.

"Federated Farmers has consistently said that cost escalation by many of our councils is out of control, and that the current medieval property values-based rating system is not fit for modern local government," Katie says.

Rates made up 48% of the total revenue of New Zealand’s 78 local authorities in 2017, "yet a property owner’s rates bill often has hardly any relationship with what that family or business actually uses by way of council services.

"Federated Farmers is delighted that the Productivity Commission’s issues paper notes not only that rates have been rising much faster than the Consumer Price Index but that ‘…non-residential ratepayers, including businesses and farms, may face distinct affordability issues’."

The Productivity Commission signals its intention to examine regulatory creep and cost-shifting (the trend of government to pass legislation/offload costs that have big impacts on councils). It also notes growth in spending by councils on what some people consider ‘non-core’ activities (e.g. culture, recreation and sport, community and economic development), which was 17% of councils’ total operating expenditure in 2017, a rise of 35% since 2009.

"Local authorities’ costs are a significant and rising burden for agri-businesses. Federated Farmers will certainly be putting in a submission to the Productivity Commission by the February 15 deadline and urges farmers and other Kiwis to take this opportunity as well," Katie says.

"In our submission and advocacy we will be emphasising the need for the Commission to dig deeper into the averages to expose the inequities of the rates system for groups such as farmers and the elderly whose incomes do not reflect their properties’ values (and therefore their rates)."

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