Editorial: City council steeped in fiscal laxity

The year following local body elections is often unpleasant for ratepayers. Newly elected councils quickly decide that if they are going to ramp up their rates this is the year to do it - as far from the next election as possible. Auckland City Council is leading the charge this time, announcing an average rates rise of 11 per cent, no less. If that figure is frightening it should not be surprising. City voters chose a council predominantly of the old-fashioned, tax-and-spend left at the election last October.

Typically, the council intends to revise the rating scale to hit higher-valued properties harder and to reduce uniform charges, both steps a reversal of actions of the previous council. Since the left-wing majority was largely elected from wards with lower valuations their voters might be content that the costs of their choice will fall more heavily on others.

But all residents ought to be concerned at this revenue grab, not just for its magnitude but for the financial laxity it represents. The Banks council commissioned a study of council operations to form the basis of its effort to cut costs by reducing peripheral activities. No such exercise appears to have preceded this council's decision to exact more revenue.

Perhaps the new mayor, Dick Hubbard, and the new council members have somehow satisfied themselves that the organisation is already operating at maximum efficiency, with no room for better use of existing revenue. Or perhaps they have been content to take the officers' word for that. If so, they have much to learn about local government.

No sector of activity has been more sheltered from the demands of a competitive economy. Local government employees have to a large degree managed to resist the disciplines the Treasury has imposed on the central Government service and costs of local government generally have steadily risen far faster than inflation overall.

Mayors and their executive officers are always quick to attribute their rising rates to the increasing activities imposed on them from Wellington, although in the next breath they plead for power of "general competence" to be relieved of the legislative restriction of their role. Now they are making another concerted effort to lobby the Government for alternative sources of funds. Heaven forbid that this comfortable and sheltered sector is ever given an easier supply of finance.

Rates might not be a perfectly fair form of taxation but like any direct tax they at least force the spending body to answer to those who must meet its costs. The more they are given a share of centrally collected revenue, or given the right to levy non-voters such as tourists, the less accountable they will be to electors.

Short-sighted electors might not mind that loss of accountability if they were relieved of some of the costs of their local services, but they would pay the price of local government profligacy in the long run. Tourist taxes and the like would exact a cost in economic activity and the weakening of electoral discipline on local government would further inflate its burden on everyone.

It is never a good sign when a new council resorts to the old ruse of raising rates drastically in the year after an election. It is an admission that the council's reasons for wanting extra revenue will not stand up to much scrutiny, hence the hope that the grab will be forgotten by the end of the council's term.

The Hubbard council rather hopefully calls its expanded budget a "congestion-buster", on the grounds that most of the extra money will be used to accelerate improvements to several of the city's arterial roads. If a few bus lanes, plus enhanced facilities for cycling, walking and parking, could unlock isthmus gridlock, ratepayers might happily accept the bill. But it is most unlikely that those projects will bust anything except confidence in the city's new government.