John Armstrong: Anything goes in rates row

The unseemly fashion in which political parties trampled over one another this week to gain credit for doing something to fix the local body rating system was MMP politics at its worst.

The net result of this unholy scramble - an independent inquiry into the funding of local authorities' local body rating system - may be the best solution.

But the parties arrived at an inquiry almost by accident and, moreover, an inquiry will delay fixing the system.

A Government working party had been quietly examining local government funding and had been expected to come up with options by the time Cabinet ministers held one of their regular pow-wows with local authority chiefs later this year.

That does not mean anything was going to happen fast. But an inquiry will take the best part of a year. It will be something of a miracle if the Government gets enabling legislation through Parliament this side of the next election.

None of this will worry New Zealand First, which emerged the winner from the tactical battle kicked off by Rodney Hide's private member's bill, which would have tied rate increases more closely to the rate of inflation.

It was less obvious, but equally significant that this was a victory achieved in the absence of Winston Peters, who is in Rarotonga recuperating from the mystery illness he picked up in Malaysia.

Peters' absences overseas as Foreign Minister have already altered the dynamics in the New Zealand First caucus, forcing the six other MPs to pick up more of the burden of highlighting the party's message and the policy gains resulting from its status as support partner.

Those MPs also had to adjust to Peters taking a ministerial post. Although the terms of his deal with Labour free him of collective ministerial responsibility and allow him to criticise any other aspects of Government policy outside foreign affairs, he has so far refrained from doing so.

This is because at this stage of the electoral cycle it is more important that he help underpin the Government's stability and leave the criticism to his colleagues.

They have not been particularly hardhitting, but there has been a subtle shift in NZ First's demeanour in Parliament when Peters is away, one which is less hostile to National and less accommodating to Labour.

The latter has been evident in the past couple of weeks. Peter Brown, the deputy leader, made no bones about reminding Labour that their support agreement with New Zealand First stipulated that the projected "Buy New Zealand Made" campaign meant just that, not the watered-down version Labour was trying to foist on the Greens.

This week, New Zealand First forced Labour to agree to hold the independent inquiry on rates, thereby snookering National, which thought it had outmanoeuvred New Zealand First by striking a deal with the Greens to establish a select committee inquiry.

Just for good measure, long-serving MP and former party president Doug Woolerton fired a broadside at Grey Power for complaining that New Zealand First was not going to back Rodney Hide's private member's bill capping rates.

It is unusual for a party that targets the 50-plus vote to weigh into its own constituency. But Woolerton's message was blunt: New Zealand First had consistently delivered policy gains to that age group and would continue to do so.

However, the elderly had to be realistic. Attacking New Zealand First and potentially weakening the party as an electoral force would be biting the hand that feeds.

Together, National and the Greens have a 5-4 majority over Labour on Parliament's local government and environment committee.

Labour was on a hiding to nothing. It could have tried to block an inquiry. But that would have been a bad look and doomed to failure anyway. So, rather than face an embarrassing defeat in the committee, Labour announced it would support National's initiative.

It is a measure of the degree to which Labour is distracted by other matters that it had to be reminded how much of a slap in the face this was for New Zealand First.

All along, it had been arguing for an inquiry into the rates problem to silence its critics, who wanted to know why New Zealand First was not supporting Hide's bill.

New Zealand First saw the bill as seriously flawed because councils would simply meet any revenue shortfall resulting from a rates "cap" by raising charges for services or borrowing.

It wanted an independent inquiry, preferably chaired by a retired judge, because MPs are compromised by the fact that central government meets around 13 per cent of councils' budgets.

Moreover, New Zealand First had adopted this stance when Hide's bill first emerged back in March.

So there was some amazement that the Prime Minister should float the idea of a select committee inquiry without informing New Zealand First and then agree to such an inquiry, for which National would claim the credit.

The final ignominy was that New Zealand First, lacking any MPs on that committee, would have been shut out of the inquiry.

Labour's preference for a select committee inquiry is understandable. It could ignore the recommendations - something harder to do with a formal inquiry instigated by the Government.

However, New Zealand First questioned the wisdom of Labour agreeing to a select committee inquiry over which it would have no control.

It seems New Zealand First's ultimate weapon was to threaten to back Hide's bill. This was language Labour could understand.

By Wednesday afternoon, Labour was suddenly saying it believed an independent inquiry was the "best way" to go - even though it did not seem to have the foggiest idea of how the inquiry would be conducted or possible terms of reference.

That is not surprising. When the Herald asked Local Government Minister Mark Burton a week earlier what he was doing to help those hit by big increases in their rates, he said he was working with Local Government New Zealand on "a range of issues and options" relating to local body funding - none of which he was ready to discuss.

The possibility of any sort of inquiry simply was not mentioned.