PM says Government looking at pressures on local body funding

A surge in local body rates has led the Government to look at whether funding arrangements for local councils is sustainable, Prime Minister Helen Clark said today.

Speaking to the Local Government New Zealand Conference in Wellington today, Miss Clark said the "aspirations" of many communities were expensive and required careful prioritising.

"All councils are aware of this, and there is currently a good deal of debate about rates, which look set to increase per household by somewhere over 7 per cent," Miss Clark said.

Central government assistance had been the fastest-growing source of funding for local government between 1999 and 2005, with councils getting $585.6 million in the year to June 2005.

Miss Clark said local and central government were facing a bulge in capital spending.

Local bodies plans showed they were facing $2.9 billion in capital spending in the coming year, compared to the $900m spent in 1996.

About 70 per cent of this would go on network infrastructure such as roads, water and waste management.

Miss Clark said her government had helped out local bodies again in the 2005 and 2006 budget with respect to drinking water and transport funding, as well as extending rates rebates.

The Government would look at the funding pressures.

"Officials are putting together a more rounded picture of funding issues, to see whether current funding arrangements are sustainable in the long term," she said.

The work should be completed by September.

- NZPA