Crisis time for ratepayers – Government needs to act to control councils.

Ratepayers in New Zealand’s two biggest cities are facing substantial rates increases over the next few years.

Christchurch’s problems arise mostly from the earthquakes of three years ago, while Auckland’s problems are self-inflicted by the council’s spending decisions.

The councils of both cities have made it clear that rates increases are inevitable unless ‘alternative funding sources’ are found.

Councils and central Government have made similar noises over the seven years since the Independent Rates Inquiry of 2007, but no solutions are in sight.

A few weeks ago Local Government New Zealand announced it was to investigate additional funding sources for councils, but not alternative funding sources.

Both Christchurch and Auckland are demanding more funding from central Government and it now seems inevitable that the funding of local councils will become a political football in election year.

It is almost universally accepted that the current rating system is unfair and inequitable, but councils and central Government are reluctant to make changes because rates are ‘easy to collect and almost impossible to avoid’.

The need for change is now reaching a crisis level as councils’ debt levels rise, and interest on that debt is forming an increasing percentage of rates collected.

Until solutions to these problems are found there is one clear cut option open to all councils - reduce expenditure on non-essential services and projects which are funded from rates.

Central Government is ultimately responsible for local government and must use its powers to bring local councils to heel and bring financial relief to ratepayers.

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