Councils want Govt to pay for regional revolution

Auckland councils want the Government to pay for overhauling regional governance while the overseeing minister is considering capping property rates throughout New Zealand.

They are also pressing for changes to recommendations of the Royal Commission on Auckland Governance on electing members to a new unitary super-council, and on merging all locally owned water operations into a single entity.

Prime Minister John Key is considered likely to indicate after today's Cabinet meeting the Government's general response to the report, including endorsement of a unitary authority, although agreement on details of second-tier representation is understood to be some way off.

Local Government Minister Rodney Hide said yesterday his first priority was to achieve good governance for Auckland but he was preparing a paper seeking Cabinet approval for a work programme for officials to examine ways of improving transparency and accountability among all councils.

"That will include looking at options of capping core expenses and rates, with ratepayers able to have a say," he told the Herald.

Mr Hide said it was too early to predict whether rates might be capped at the level of inflation plus an increase based on population growth, a system the NoMoreRates lobby group says is widely used in the US.

But he acknowledged the possibility of holding referendums in conjunction with local body elections, to give ratepayers more control over spiralling costs imposed on them.

"You've got to imagine having a ballot at the time of an election saying, yes, I'd like my core expenses capped for the next three years, or something along those lines," he said.

"The thing is to get on top of this endless increase in rates."

Mr Key said: "There is no question there is a real desire to see rate increases brought under control, but we have seen no proposal from the minister yet on how to achieve that.

"We welcome suggestions but would need to carefully consider the ramifications of it."

Mr Hide said officials were working to investigate council costs, which the local government sector told him came from requirements of the former Labour Administration.

As well as tougher air and water quality standards, these included "over the top" consultation and auditing requirements.

He wanted effective accountability, rather than "mandatory consultation where councils have gone through the motions just because it's been a legal requirement".

But an immediate extra cost challenge for Auckland councils is for creating a unitary super city across the entire region, priced by the royal commission at $120 million to $240 million.

That has led to a call by six councils for the Government, rather than their ratepayers, to foot the bill.

"The cost of reform will be significantly beyond the capacity of ratepayers to pay, has not been budgeted for in draft long-term plans, and the funding gaps should be met by the Government," said leaders of the Manukau, Waitakere, North Shore, Rodney, Franklin and Papakura district and city councils in a letter to Mr Hide.

North Shore Mayor Andrew Williams, whose council is already considering imposing the region's largest average rates rise of 6.4 per cent from July, said his ratepayers could be faced with an extra $20 million to $40 million bill for the overhaul.

"These huge restructuring costs will have to go on top of currently planned increases," he said.

"Why should ratepayers be charged for a central Government-imposed restructuring which a vast number of people do not agree with, and who also question what real benefits will be gained from this Auckland upheaval at a time when the economy is in such a fragile state?"

The six councils also told the minister that although they agreed Auckland needed a strong new regional body, they believed the commission's proposals "do not provide truly representative democracy".

PAYING THE WAY

* Royal commission estimate of cost of restructuring Auckland - $120 million to $240 million over four years.
* Commission's estimate of annual savings from efficiency gains - $76 million to $113 million.