Government backs rates inquiry

John Carter

The shockwaves from big rates bills have forced politicians to set up a parliamentary inquiry into the rating system - and the Government today said it backed the move.

Galvanised by intense debate over Rodney Hide's private member's bill to cap rates rises, National and the Greens last night agreed to support a select committee inquiry into the property tax system which gives local councils their money.

The two parties have five of the nine seats on the local government and environment select committee, and will use this majority to initiate an inquiry, possibly within days.

Local government select committee chairwoman Steve Chadwick today said Government MPs would also support the inquiry, giving it unanimous support on the nine-member committee.

She said on National Radio that MPs would start drafting terms of reference as soon as possible.

National's local government spokesman, John Carter, said the aim was a "comprehensive, wide-ranging review" to address local government funding issues, costs, and the rating system.

The Greens want public transport and Maori land rating issues in the mix.

The unlikely political pairing of National and the Greens emerged late in a day of fast-moving negotiations between parties before today's first vote on Mr Hide's bill.

The bill would cap rates rises at the level of inflation plus 2 per cent in any year, and is a reaction to big household rates increases - up to 13.4 per cent in Auckland.

The Herald has run two series on soaring rates, an issue that has become so politically hot that Prime Minister Helen Clark early yesterday revealed she was talking to New Zealand First about a possible select committee inquiry. Last month, she held out little hope for further Government funding to ease the pressure on ratepayers.

Rates on her Auckland home went up 13 per cent this year, and she acknowledged "some of the projected increases are quite high".

"You may have some councils which have under-invested for years and years and years and have some catch-up," she said.

"The issue is how they catch up, how they plan, phase, scale, fund, perhaps try to spread the funding over further generations of ratepayers."

Labour's move to back an inquiry would have addressed, at least in part, New Zealand First's calls for a commission of inquiry into rates.

New Zealand First's seven MPs have come under intense lobbying, particularly from Grey Power, to vote for Mr Hide's bill.

The party hasn't ruled this out, but was hoping to get something out of its talks with Labour to claim as its own victory.

These talks appear to have been overtaken by National's late deal with the Greens, which will lead to a select committee inquiry regardless of whether Mr Hide's bill passes its first reading.

Mr Carter said that after the Prime Minister's statement earlier in the day "one assumes her members will want to vote for it as well".

The select committee meets tomorrow, when the inquiry and its terms of reference are likely to be discussed.

Auckland City Mayor Dick Hubbard welcomed the inquiry, saying a joint local government-Department of Internal Affairs examination of the rating system had dragged on for two years.

"It may be that a select committee will put a bit more urgency and a bit more grunt into the whole question," said Mr Hubbard.

The main issue he wanted to see addressed was a form of direct and guaranteed grants from the Government so councils did not have to go cap in hand on a project-by-project basis to Wellington and compete with other councils.

An inquiry should also look at other sources of money, such as bed and utility taxes, GST on rates, regional funding issues for Auckland and rates on Crown-owned properties.

Schools, universities, hospitals and other Crown properties do not pay rates.

Grey Power yesterday backed a select committee inquiry with broad terms ofreference.

Its national body was meeting in Auckland yesterday to discuss the rates issue.

National vice-president Don Chapman said the issues needed to be brought into the open to find a sensible alternative to the current situation.

"We have had complaints throughout the country from our members," he said.

"Their concerns are how they are going to meet these costs and when is it going to end.

"Councils are talking about rates increases going on for 10 years, which is absolutely ridiculous."

- additional reporting: NZPA