Prime Minister Christopher Luxon, with Local Government Minister Simeon Brown, holding a media conference after his hard-hitting speech to the LGNZ conference in Wellington. 21 August, 2024. New Zealand Herald photograph by Mark Mitchell
Prime Minister Christopher Luxon, with Local Government Minister Simeon Brown, holding a media conference after his hard-hitting speech to the LGNZ conference in Wellington. 21 August, 2024. New Zealand Herald photograph by Mark Mitchell
Costs for things such as road rehabilitation costs have increased dramatically since 2018.
Neil Volzke is Stratford District Mayor.
OPINION
I would say August’s Local Government Conference was not the standard get-together, educational or information-sharing occasion you might normally expect in this sector.
This year’s conference was dominated by political speeches and there was an impressive list of politicians, including Prime Minister Christopher Luxon, ministers Shane Jones, Simeon Brown, Chris Bishop, and Louise Upston, and the Leader of the Opposition, Chris Hipkins. All this, and it’s not even an election year.
It was the Prime Minister’s speech that grabbed the media headlines, and rightly so I think, because it is fair to say he gave us a good old-fashioned bollocking. It was a call for back to the basics, focusing on infrastructure and core services. That upset some of the more sensitive souls among us, challenged others and was water off a duck’s back to the older, more seasoned, campaigners who, incidentally, are rapidly becoming fewer in number. It was what I would describe as being a classic blame game strategy that always results in no winners.
But maybe the PM had good reason to be grumpy, after all, the Government’s flagship tax relief policy had just come into play, putting millions of dollars back in the pockets of millions of people and helping to stimulate the economy out of the current recession. Then, at the same time, councils imposed massive rate rises across the country that swept up a decent chunk of the same cash, leaving many people no better off and the real impact of the tax relief was compromised.
My point is this, taxpayers and ratepayers are the same people, emphasising the fact central Government and local councils are so intrinsically linked we have to work in a more unified way and optimise resources. How Government policies affect people through the rates system is a key driver of council costs and this needs to change. Look at this recent roading example from central Government.
The Government’s change to the speed limit rules outside schools indicates all such signs should be variable and not permanent. The inference is that these variable signs should be electronic. In the Stratford district, we would require 27 signs at $15,000 to $20,000 a sign installed. This would equate to $405,000 to $540,000 to replace the current permanent signage. We have not budgeted for this new expenditure. To do this work, either we have to find internal savings that cover this cost or increase rates to fund it. For Stratford, $160k equates to a rate increase of 1%, meaning we are up for a 3% rate increase to fund this project alone. To be fair, this lack of support funding is not unique to the present Government, unfunded mandates such as this have been in existence for decades.
On reflection, while the PM’s tone was blunt, his message was clear, and I think that many elected members in general, agree with him that councils need to be more focused on keeping costs down and focusing on delivering the core services. But even then, holding costs down for basic infrastructure needs will be challenging when councils continue to be given unfunded tasks that become a cost to our ratepayers.
In the meantime, as the local government sector moves towards the long-term goal of localism and central Government talks about the devolution of responsibilities to the sector, we still have this imbalance caused by unfunded mandates. The lack of support financially and logistically overall, suggests local government has facilitated the transfer of many functions and costs from taxpayer to ratepayer.
A Productivity Commission report from 2020, included a graph that illustrated perfectly where taxation money goes.
A Productivity Commission report from 2020, included a graph that illustrated perfectly where the taxation money goes. Despite the local government sector taking on more and more responsibilities over the 120 years as shown, we see the funding as a percentage of GDP has flatlined but the same cannot be said for central Government.
I look forward to the challenge of meeting the PM’s expectations for the sector, albeit difficult to achieve, but things do need to change. The soon to be revealed, new proposed local government legislation will enlighten us on what those core services are and what we need to focus on. Maybe this will enable us to succeed in keeping rates affordable, maybe some council services will cease to exist and maybe, just maybe, central and local government can take a more unified approach to getting things done.
