Statement from Mayor John Law
for Greypower Public Rates Meeting
Friday 11th August 5:15PM

For the last 4 years I have been quite vocal in the need to change the way Local Government is funded.

The fact of the matter is that the rating system is out of date and incapable of funding all the infrastructure requirements that are required in today’s world. The Government over the last year or two has announced extra pots of money to which Local Government can apply for extra funding, for example $1.62billion for transport followed by a further $684million and $500million; $150million for drinking water for villages with a population of 5,000 or less; $35million for wastewater and approximately $150million for economic development. The very fact that these funds are being allocated confirms that the rating system is inadequate.

Councils have to fund for depreciation of the assets, inflation and the cost of borrowing. Borrowings have an intergenerational impact so that today’s ratepayers are not fully impacted upon. These three aspects alone that need funding will account for 10% rate increase for most councils and even then they are virtually standing still because councils need additional funding to cope with the demands on infrastructure from growth.

The problem is that when rate increases are expressed as say a 10% rise that this is an average rate increase and some people may go up 5% and others 25%.

Ratepayers have had enough of this system and we have to challenge the whole process. I am advocating for example that roading is removed from rates. Why should ratepayers be the only people paying for roads? Roading should not come out of rates but go on the cost of petrol so that road users are paying, that would lower our rates by approximately 32%.

In addition, we should increase GST from 12.5% to 15% and then there will be no need for rates at all and everyone in New Zealand through the sales tax system would pay for infrastructure including tourists. Our innovative rates postponement scheme is a very helpful instrument for delaying the impact of rates but really its the rating process itself that must be challenged.

We have been successful in so much as Local Government New Zealand set up a working party with Treasury to look at rates but I don’t believe that the recommendations will be radical enough. As far as RDC is concerned, we are trying to be as efficient as possible but the pressures of being one of the fastest growing districts in New Zealand is making it very difficult for our ratepayers and staff.

ENDS

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