Pee Kay
No Minister
On the 1st of December, Prime Minister Chris Luxon, and Local Government Minister Simon Watts, announced Cabinet’s decision on how they will cap council rates.
The rates cap will be a variable target band, starting with minimum increases of two per cent and a maximum of four per cent. All good, so far.
A slew of ratepayers around the country would have been extremely delighted with that announcement.
Go for it the many cried!
Haven’t we all been subjected to the malevolent feeling of the ‘greedy’ hands of Local Government in our back pockets wanting a bigger slice of our hard-earned cash!
Even Chris Luxon knew that feeling, saying, “…ratepayers were fed up”.
Latest statistics show that during the 2019–22 local body term, remembering this is the Covid era that delivered record inflation, the period that councils experienced significant revenue losses, we suffered average rate increases of 18.4 per cent.
But that 18.4 per cent was well and truly eclipsed by 2022–25 average increase of 34 per cent!
So, yes, those councils that were building lustrous new office blocks, those councils that were paying upper end salaries to too many staff, those councils that were being ‘run’ by CEOs that seemed to believe they ran a feudal fiefdom, those councils that thought vanity projects were more important than water or roading infrastructure were being put firmly in their place!
“They’re tired of having to prudently manage their own budgets while rates continue to go up, only to see their local council fail to demonstrate the same fiscal discipline,” postulated Chris Luxon.
At first glance, rate capping seems like a well-intentioned and much-needed measure. How could limiting how much councils can increase rates each year not be better for ratepayers? It was, after all, going to offer some protection for households: households that are feeling the pressure of rising living costs.
But are we actually being served A Curate’s Egg?
This is a classic case of ‘devil in the detail’ and there are some bloody obvious ‘devils’!
Luxon and Watts announce that rates will be capped – from 2029!
Could a politician be any more disingenuous? Could a politician be any more duplicitous?
National may not even be in government in 2029.
They may not even exist as a party the way they are going.
Are they serious when in essence they are saying to voters: Stand back and watch councils increase rates to the maximum in those intervening three years?
Are councils going to be that blatant, that mercenary by hitting ratepayers with another 30 per cent+ before 2029?
And there are a few not so obvious ‘devils’.
A new regulator will be put in place to enforce the government’s rates cap. Will the regulators’ costs, because they will require premises and admin staff, be sheeted home to councils? We all know who will end up picking up that tab!
Announcing the move Simon Watts clarified the two per cent minimum reflected the midpoint of the Reserve Bank’s inflation target, while the four per cent maximum reflected “long-term economic growth”.
But as is the norm with hasty, make us look good, keep the punters happy legislation, it was not clarified in the initial statement how and when the target band might change and, get this, how it would be calculated!
Legislation on the fly?
Watts stated the government expected the band would be reviewed every three years, but that was subject to consultation.
“…expected the band would be reviewed every three years” “subject to consultation”. How’s that speculative and indefinite!
He did pull on his “definitive” pants when stating:
“The government was not considering allowing councils to raise revenue through a levy on tourists, like a bed tax.”
“We want councils to be focused on the money that they’ve got and make sure they’re doing a much better job of managing it.”
Isn’t this more ‘political tinkering at the edges’?
The phrase used in a political discourse to describe superficial, minor, or insufficient changes to what is in actuality, a significant problem. Political tinkering at the edges implies that the proposed improved legislation or reforms do not address the core or systemic issues, politicians are only opting for peripheral adjustments and implying ‘job done!’
Is this duplicitous announcement simply bolstering National’s plan of ‘fixing the basics and building the future’?
I found this when undertaking some research on capping rates – The Local Government Act 2002 and the Local Government (Rating) Act 2002 both enshrine a strong commitment to local autonomy, financial prudence, and community consultation. Councils are legally obliged to operate a balanced budget under Section 100, to consider all reasonably practicable funding options under Section 101(3), and to adopt transparent and predictable funding and revenue policies under Sections 102 and 103.
Does not a rates cap cut directly through those responsibilities? Does it not disregard the council’s obligation to evaluate local funding needs? Does it not exclude the ratepayers from voicing their opinions on rates increases?
If rates increases are to be determined/enforced by a government regulator, does that negate any consultation process open to ratepayers and how would that fit with “community consultation”?
Okay, maybe the councils can still consult with ratepayers about what services they want/are needed, but if the funding limit has already been decided and imposed by government, are those discussion not rendered meaningless?
How are ratepayers going to be better off?
Last week a press release by the New Zealand Taxpayers Union Executive Director Jordan Williams stated:
Local Government New Zealand are gaslighting ratepayers. So desperate to defend rates having gone up by more than 34 per cent over the last three years – two and a half times the level of inflation – they now plan to spend ratepayer money to fight ratepayers.
This is a middle finger from LGNZ, not just toward ratepayers, but towards Local Government Minister Simon Watts and Prime Minister Christopher Luxon for trying to get the cost of living under control.
LGNZ is nothing but a left-wing Labour Party political campaign. Any pretence of political neutrality or moral authority has vanished with this vote.
So much for LGNZ having ratepayers best interests at heart!
Ratepayers will be unable to sustain the level off rate increases we have endured over the last few years and any mechanism to ensure a more manageable and sensible course of action is implemented by councils would be welcomed, but are we getting a small helping of good in exchange for more central government control?
A Curate’s Egg?
True Humility by George du Maurier, originally published in Punch, 9 November 1895.
True Humility pictures a timid-looking curate eating breakfast with his bishop.
The bishop says: “I’m afraid you’ve got a bad egg, Mr Jones.” The curate replies: “Oh no, my Lord, I assure you! Parts of it are excellent!
This article was originally published by No Minister.
