MEDIA RELEASE

Let’s stick to the facts, says Local Government New Zealand
For immediate release on 28 November 2008

It’s time to get the facts about local government straight, President of Local Government New Zealand said today, after public discussion this week on the role of local government.

“The local government sector has a crucial role to play in the economic and social challenges New Zealand currently faces.

“Other Western countries are not only looking to local government to assist with the economic downturn, but are investing more funding into local infrastructure. They recognize the role that local government has in communities and that it is part of the solution to the economic slow-down.

“The core business of local government is responding to the needs of their communities across the social, economic, cultural and environmental areas. While the largest drivers of council expenditure are the significant areas of roads and pipes, it is the community that gives the council the mandate to provide parks, and libraries and museums, and to lead and support initiatives in community social issues and economic development.

“The perceptions of individuals or groups within communities such as business or agriculture are an important part of this consensus, but only part.

“Some myths about local government need to be corrected. The first is that councils are quick to raise rates. The opposite is true. Most councils are very aware of the political consequences of rates increases. Councils only increase rates after thorough consideration of the consequences of, for instance, not fully funding core infrastructure, or not meeting community expectations about recreation or safety. Councils are fully aware that those who increase rates too far are the ones who suffer at the elections.

“There is also a public perception, encouraged by parts of the business lobby, that councils should restrict their rates increases to no more than the rate of CPI inflation.

“While some councils have made considerable effort to achieve this, others have been unable for two reasons.

“Rates for some are the only source through which councils can raise capital for investment in infrastructure. If the community needs a new park or sewerage system, this often has to be funded through an increase in rates. It is like a household needing to find money, beyond regular living expenses, to replace the roof.

“Secondly, the cost drivers for local government expenditure are typically higher than the consumer rate of inflation. Roading and construction costs have tended to increase more than the CPI measured rate of inflation. Rates cover both present and future funding needs, and in some cases are also catching up on past under-investment.

“For all these reasons it is neither practical, nor beneficial to communities, to manage rates within nationally-imposed constraints which cannot capture or respond to the range of councils' needs and resources.

“If people are concerned about what their council is planning and the level of rates, now is the time to get involved. Councils are currently considering all of their investment and spending decisions as they draft their 2009 – 2019 Long Term Council Community Plans (LTCCPs) and will be consulting on these early next year.

“When preparing their plans councils will have addressed such questions as: the rationale for undertaking each activity, what the benefits are from each activity, how activities should be funded and the how the funding sources will impact on the different communities. Given the current economic situation any new requests will be scrutinized closely.

The Government’s analysis of the 2006-2016 LTCCPs noted that councils planned to spend something like $31 billion on capital investments over this period. Of that total 75 percent is committed to network infrastructure, such as roads, drains and pipes. Most of the rest is committed to community infrastructure, such as halls and libraries.

“The suggestion that councils and councillors fail to approach their spending in a disciplined manner does not stand up to scrutiny.

“We look forward to discussing these issues with the Local Government Minister,” said Mr Yule.

ENDS

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