Editorial: Hide's blunt council plan a flawed model

Rodnety Hide is portraying himself as the ratepayers' champion as he pursues local-government law changes. But nothing he is suggesting is particularly novel. Nor is it likely to survive long past a Department of Internal Affairs law review, which appears to have been approved by the Cabinet as an exercise in debate rather than a sign of intent.

There are three broad strands to the Local Government Minister's thinking. First, Mr Hide is keen to strip local councils' spending back to core services, on which they could spend automatically. Second, he wants councils to seek case-by-case approval from their ratepayers for "extras" - cultural, environmental and social spending and business investments. Third, his work on a regime for capping rates seems to have morphed into the idea that voters at local-body elections should say how much they are willing to pay in rate increases over the next three years. All these notions have some appeal in theory but are flawed in practice.

The idea of restricting council spending to core services has surfaced before, notably in 2001 when Sir William Birch presented cost-cutting recommendations to the Auckland City Council. He argued core activities related to services to rated properties - the likes of drainage, water and waste disposal and roads. They excluded the likes of parks, zoos, arts and culture and pensioner housing. Mr Hide takes a similar tack, saying the requirement for councils to deliver on "community outcomes" pushes them into providing services well beyond their core roles.

In response to Sir William, Auckland City quit pensioner housing, an activity where its involvement duplicated that of central government. But it went little further. The council sensed that running a city is about more than stark spending statistics. It is about making a city more liveable and binding the community together.

Ratepayers, by and large, acknowledge this and are happy to pay for art galleries and the like. They recognise that such facilities are often not attractive to commercial operators and will not attract sufficient private sponsorship. The Prime Minister also appears to appreciate this, saying social policies are an important role for councils. John Key's response suggests Mr Hide's push will gain even less traction than Sir William's.

There are, of course, times when councils involve themselves in risky commercial operations that should be left to private enterprise. This lies at the heart of Mr Hide's wish for ratepayer referendums. But these polls, which would also govern cultural, environmental and social spending, could become a recipe for inaction. Some people are opposed to virtually any spending. Others become enthused about council facilities only after they are built, and will not offer their support in referendums. With low turnouts, such polls can easily be hijacked by a vocal opposition.

Likewise, it is hard to imagine ratepayers saying other than they want a minimum increase in rates over the next three years. The concept has the same air of superficiality as Mr Hide's plan for a rating cap. This failed to recognise that, from time to time, councils have projects which demand an extra revenue boost. A cap would also provide a readymade excuse for council inactivity. Rate increases are highly visible and that, in itself, acts as a brake. Councils know too many breaches of the inflation rate are a prescription for the minimum tenure.

Useful recommendations may yet come from the Internal Affairs review. One would be a reduction in the long-term planning, often of little more than wishlist nature, required of councils. Another would be a lessening of the onus to consult. These have far more substance than the regulation and redirection sought by Mr Hide.