Clark plays it cool as councils cry poor

Helen Clark

Helen Clark yesterday appeared to pour cold water on local authorities' hopes that the Government might find further funding to ease the pressure to keep raising rates.

Her response followed the opening of the Local Government New Zealand annual conference in Wellington yesterday, where president Basil Morrison flagged funding problems as one issue that "continues to affect all councils".

"Funding is a critical issue and one that we will continue to lobby Government on. I believe we need to take a cold, hard, objective look at just how much of this additional cost is being added to the business of local government by the Government raising the bar, imposing national standards and making compliance more complex."

The issue has recently caused a furore in some areas. In Auckland, for example, projections show rates rising by 54 per cent, on average, over the next decade.

National leader Don Brash plans to focus on the issue in a speech to the conference today, blaming the Government for increasing the rates burden.

Mr Morrison said Local Government NZ was "looking forward with a great deal of interest" to a review of local government funding by central government, being undertaken by the Government.

Local government was under unprecedented pressure over projected rates rises. While the Government had made significant funding injections there had to be further state assistance to keep the lid on rates rises, he said.

However, Helen Clark yesterday appeared to indicate that further help was unlikely to come from central government which had already increased its funding "quite substantially".

"I'm told that in the first five years for which we've got figures through to June 2005, central government funding as a proportion of local government revenue actually rose from about 8 per cent to about 12 per cent, which is a 50 per cent increase.

"I'm told that the amount that was paid in the year to June was about $585 million, I'm told that central government revenue to local government is the fastest growing source of revenue that local government has."

She did not believe other measures such as the recent expansion of the rates rebate scheme, now expected to help as many as 300,0000 ratepayers, had been included in the figure.

In a speech to the conference yesterday, she had pointed out that spending had to be "carefully prioritised. We can't all spend on everything we want to all at once. Central government can't and local government can't."

The funding review, being worked on collaboratively with local government, is expected to be completed by October.

"But I have to say that the first stage of that review did not show that the great bulk of councils were facing significant funding problems at all. Some were, some of that is self-inflicted, some of it may be because of other issues."

Asked if this signalled that she was not keen on more funding for local government, she said: "We are always prepared in good faith to look at the funding issues, but the first round of the funding review did not suggest that there were huge issues for most councils."