Two new rates will do little for district

Your View

Because of financial calendar requirements, council Annual Plans are mistimed from a psychological perspective. Plan approval occurs at the winter solstice when days are short, cold and wet. Winter is our season of discontent. Climatic determinists argue that weather factors impact on human behaviour citing the beautiful long sunny days of the Mediterranean as responsible for the rise and longevity of Greek and Roman culture. Sadly though, Greece and Italy are now financial cot cases. So too, some say, is our Wanganui District Council.

Not so. Council's problems are on a different plane. Council does not have much of a financial problem, but has made some poor decisions. Its focus has been archaic and narrow. Ultimately its fiscal decisions do not reflect due consideration of the state of our wider economy or economic plight of its constituency. This is not the time to get tough with the community. It is time, however, for council to tough things out.

Wanganui's rates are excessive for a flaccid economy. To the forefront of the regional pack with a 6 per cent rate increase, our rates were struck in full knowledge of the nation's 1 per cent annual inflation rate. They were struck in full knowledge that we face impending increases in food and energy costs which will follow the worst drought in the US for 60 years. Argument is advanced that local government inflation is higher than the general rate of inflation. This is obfuscation because it is not six times thus. As long as the iniquitous mechanism of rating remains the principle source of council funding, rates linked to regional GDP would better reflect their affordability.

This year's horror introduces two new rates which are responsible for one third of the increase, projected to fall to one fifth of the increases slated for the following three years. After that it looks slightly better, but the increases compound anyway and the 10 Year Plan foretells rises on current rates of around 70 per cent by 2021/22.

Fixed and low income households will miss the food and fuel dollars taken by higher rates. Businesses looking to invest in employment, stock, plant replacement and technology will lose funds. Council, while promoting the brief window of opportunity offered by the current roll out of ultra-fast fibre, will deprive business of capital to make good on this!

Council's plans are subject to change. And change they must. The new rating categories are the debt retirement levy and the earthquake strengthening rate. Are these necessary? I would argue not. At least, not now.

Council's current debt is just short of $100 million and is forecast to peak at $119 million in 2015/16. Whether this is prudent borrowing is judged objectively by four criteria set by council in its Liability Management Policy. These limits are advised by Local Government NZ and their adoption subject to local decision. What debt can we safely carry? Why is council's debt so strongly fenced by council's income? Central government considers the manageability of its debt with reference to GDP. District councils operate as a subset of the same economy and carry out similar functions: they tax and spend for the benefit of the community and its infrastructure. Is it unreasonable to base the management of local authority debt on district GDP? If so, it is notable that Wanganui's debt is a meagre 4.7 per cent of district GDP.

The necessity for an earthquake rate should be challenged on two fronts: the magnitude of an earthquake risk and the Government's morality in forcing huge costs on local communities.

Wanganui is losing jobs. What employment opportunities will the collection of these two new rates create? None, I'd wager.

There will be no immediate community benefit from the new rates. These measures are ill-timed, punitive, economically daft, and therefore unwise.

But, we are past the shortest day, the weather will get warmer, Angela Merkel will find a way for Greece to recover and we will all feel better.

Alan Taylor is a Westmere farmer and member of the Rural Community Board. The views expressed are his own and should not be taken to represent the board's stance.