Hide wants ratepayers to have spending veto

Rodney Hide. Photo / Richard Robinson

Councils wanting to open art galleries, sell Lotto tickets or buy movie theatres could be forced to let ratepayers make the decision.

The idea is part of proposals to trim local government spending.

Local Government Minister Rodney Hide is looking into law changes that could divide council spending between core services, which councils could automatically spend money on, and "extras" - cultural, environmental and social spending and business investments that could require approval from ratepayers.

Mr Hide has not listed all the services he considers core council responsibilities. But he said it would be a wide definition encompassing running libraries, transport and water services and rubbish collection.

Yesterday he listed Hamilton City Council's investment in the Novotel hotel, Invercargill City Council's investment in a Lotto franchise and South Taranaki District Council buying the Hawera movie theatre as examples of councils going beyond core functions.

Activities that were not classified as such - for example, providing pensioner housing or major projects such as art galleries costing more than a specified amount - could be put to a ratepayers' vote on a case-by-case basis, he said.

Mr Hide said he would like voters to be able to indicate at local body elections how much they would be willing to pay in rate increases over the next three years.

Local Government New Zealand governance manager Mike Reid said many councils would not bother with innovative projects if they had to hold a referendum first.

"Invercargill could have held a referendum [on the Lotto shop] but the people on the local community board probably felt they knew what people wanted because they saw them every day in the supermarket," he said.

"Any council that exposes itself to too much [financial] risk can be expected to be removed at the next election."

Mr Reid cited Auckland City as an example of a council that had been changed several times because ratepayers were not happy with spending.

Taking decision-making powers away from councillors would stop energetic and entrepreneurial people standing for local bodies, he said.

"If it was such a great idea [requiring ratepayer approval] central government might like to apply it to itself, because we're talking about quite small amounts of money."

Gerard Langford, of South Taranaki District Council, said his council bought the Hawera cinema building for $1 million two years ago because the private owners were about to close it.

The community supported keeping the movie theatre, which was run by a trust using money from ticket sales and advertising, he said.

The Local Government Act in 2001 gave councils powers of general competence, allowing them to undertake almost any activity for local communities.

The Cabinet this week approved Mr Hide's request for the Department of Internal Affairs to review the law.

He wants removal of the requirement for councils to be involved with "community outcomes" such as social, environmental and cultural "wellbeing".