Local govt reforms driven by ideology, not good governance

A manufactured crisis is being used as an excuse to drive ideological changes to local government, the Green Party says.

“Central government proposals to cap rates, limit council spending, and force amalgamations would further undermine local democracy,” Green Party local government spokesperson Eugenie Sage said.

“The key challenges local authorities face are a backlog of infrastructure investment where populations are growing and their reliance on rates as their major funding source.”

The National-led Government’s false crisis ignores a number of key facts from Local Government New Zealand about how local government is performing:

· Council spending on so called "non-core services" — such as culture, recreation and sport — declined by $ 185 million between 2008 and 2010 to 13.2 per cent of authority spending.

· From 2007-2010 rates were a stable portion of household expenditure; holding steady at 2.25%.

· The recent Productivity Commission’s draft report on housing affordability notes that rates have been declining in relation to property values, indicating that in terms of household wealth, rates are becoming less significant.

· Local government has been more efficient than central government at keeping labour cost rises under control.

· Total council expenditure on interest repayments as a percentage of total council operating revenue in 2011 was 6.42%, up from 5.51% in 2010 and 5.22% in 2009. The internationally prudent benchmark is that debt servicing should be below 10% of an organisation’s income.

· Auckland is the area under the greatest pressure from population growth coupled with a lack of past infrastructure spending. As a result it is under a high debt load. Some former Auckland Councils’ debt expenditure has exceeded 10% of operating revenue.

“At a time when central government is borrowing heavily to build infrastructure and ease the global financial crisis, it’s rich for them to tell local government to, “do as we say, not what we do,” Ms Sage said.

“Instead of badgering local authorities, Local Government Minister Nick Smith ought to congratulate the many councils that did a good job of coping with the global financial crisis, while ensuring essential infrastructure was built.

“Re-instating a regional fuel tax would help reduce councils' dependence on rates if that was really the Government's concern.

“Nick Smith is relying on the shock doctrine to instigate ideologically driven changes to local government, ignoring the facts,” Ms Sage said.