Media Statement 2 November 2006

Local government rates funding inquiry “narrow and cynical”

The long government sector might be celebrating the terms of reference of the long awaited local government rates funding inquiry, but ratepayers have cause for concern, according to the Property Council of New Zealand.

Connal Townsend, the National Director of the Property Council, said the terms of reference announced by Local Government Minister Mark Burton is narrow, because it fails to provide adequate scope for addressing key cost-pressures that drive up the cost of rates, financial and development contributions to residential and business ratepayers throughout New Zealand. “

If the inquiry is to do a good job it needs to address a number of key issues, which are not covered by the Government’s terms of reference. This includes the fundamental issue of an administrative and compliance responsibilities devolved to local authorities by central government. This issue has not been explicitly covered in the terms of reference. “

The local government sector has emerged as a major source of inflationary pressure over the past 10 years. The Property Council believes this partially due to some local authority’s poor financial stewardship and an over-reliance on a cost-plus funding policy where rate increases are preferred to cost-savings. But an increase in compliance costs devolved from central government is also making local government a more expensive and cumbersome beast, especially in areas such as building compliance and regulation.

We believe this situation must be addressed by the inquiry. “The Property Council is pleased that the terms of reference provide for an examination of the level of rates, the level of rate increases and trends in the use of rating tools nationally to fund services. We are also pleased that the terms of reference provide for an examination of other sources of revenue available to local authorities, which must include financial and development contributions,” Connal Townsend said.

The Property Council lobbied for the terms of reference to include an investigation of funding tools such as financial and development contributions. Many local authorities have adopted aggressive and inflationary contributions policies, concurrent to increasing rates, which compromise the ability of low income and working families to afford their first home.

One of the key concerns of the Property Council is that not all public submitters will necessarily be able to provide oral evidence. “The Property Council will certainly be lodging submissions to the inquiry, which deal with a range of local government rates and other funding issues.

We will be seeking to provide oral evidence in support of our submission. If we can sit down and provide comprehensive research and analysis, which assists the inquiry, we would expect the inquiry to act in good faith by providing a forum for us and other public submitters to present oral evidence. Denial of this right would severely undermine the credibility and legitimacy of the inquiry itself,” Connal Townsend said.

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