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Local Government Spending Must Be Constrained

Local Government Spending Must Be Constrained

"Rodney Hide's Bill aimed at constraining local government spending is a welcome initiative", the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.

"If it had been in place right now, Aucklanders would not be facing anything like the exorbitant spending on uneconomic projects funded by the Auckland Regional Council. Last year's local government legislation gave councils even more expansive roles and a so-called power of general competence. We can expect more problems of this kind.

"The Local Government (Rating) Act was passed as recently as 2002. The need to revisit it arises precisely because the government took no notice of groups calling for more effective constraints on councils. There have been statutory constraints on council spending in Britain and further caps are being mooted. Mr Hide's Bill is in line with such ideas."

Mr Kerr said that, contrary to the statement by the National Party local government spokesman Gerry Brownlee, the problems of council spending had little to do with responsibilities that central government had "fobbed off" on to them. Most of them were of their own making.

"The last thing we want is for the government to hand over a cheque book to councils as Mr Brownlee suggests. The government has already given them a cheque book and the outrageous rate increases are the result. Mr Hide's proposal to directly constrain rate increases is the right approach."

Mr Kerr noted that the National Party spokesperson for finance, Don Brash, had been raising similar ideas to Mr Hide's for limiting increases in central government spending to inflation and population growth.

"These kind of constraints are essential to prevent business development from being crowded out by excessive public spending and to promote economic growth", Mr Kerr concluded.

"The government should support consideration of Mr Hide's Bill by a select committee if it is serious in saying that economic growth is its top priority."

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