Will local government end the rates spiral?

“It’s time to find out if local government is prepared to step up to the plate and show leadership by controlling its own costs,” says Don Nicolson, Federated Farmers President.

Federated Farmers will commence writing to all local and regional councils next week, asking if they intend to freeze or cap any increase in council rates and charges to less than three percent, New Zealand’s expected inflation rate for the forthcoming year. With non tradeable inflation stubbornly high due to Government spending, electricity and council rates and charges, Federated Farmers will urge councils to bring their own costs under control and alleviate the financial pressure on farmers and businesses.

“Hurunui District shows it can be done as they are seeking to increase their rates by just 0.26 percent. Last December, the Reserve Bank Governor expressed concern about domestically generated inflation and in particular, local body rates. Hurunui has listened to Dr Bollard and its ratepayers. We now wish to establish if the rest of the local government sector will show similar discipline.

“Almost every year we see local authority rates increasing and this has helped drive inflation. This has sucked money out of businesses far better utilised for investment and expansion. In fact, the Department of Internal Affairs estimates that rates will increase by 56 percent over the next ten years. That is an unsustainable burden and 2009 will be an opportunity for councils to break this rates spiral.

“2009 will be a tough year on business so the emphasis must be upon the quality and not the quantity of spend. For too long we have seen councils commit to gold plated projects or get sucked into wasteful non-core activities.

“Federated Farmers will also ask all mayors and chairpersons if they will follow Parliament’s lead by freezing councillor honorariums and the salaries of senior council management. This is a chance to prove that councils genuinely care about community well being.

“What we are looking for is leadership, not just in the 85 local and regional councils, but from all the community boards, the 21 District Health Boards and 23 licensing trusts as well. Outside of Parliament there are some 2,078 elected positions. It’s high time for those people to show that most unfashionable of virtues, self-sacrifice,” Mr Nicolson concluded.