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New thinking call on rates nets interesting ideas

20 July 2006

Media Release

Chamber “New Thinking” call on rates attracts interesting ideas…

The Auckland Chamber of Commerce call for “new thinking” to stop local councils using ratepayers as cash cows to fund worthwhile activities has produced a wealth of interesting ideas, including from Canada and Australia.

The ideas follow a suggestion earlier this week by Chamber chief executive Michael Barnett that in the face of annual rate increases of 10% flagged for the foreseeable future by Auckland councils – well above inflation – for funding projects, the traditional system is weighted too heavily against ratepayers.

“We need to find a more equitable spread so that more of the region’s 1.2 million residents – and increasing by about 26,000 a year - are not getting a free ride on the ‘lucky’ 450,000 who own property and pay rates.”

The suggestions include:

- Introducing bonds that Aucklanders could invest in at a low rate of interest but as a means of creating a mixed portfolio for investing in Auckland’s future.

- Tagging some of the Cullen Superannuation Fund for investment in infrastructure developments in Auckland and other regions.

- Challenging why Auckland city, as a cost centre, should be one of NZ’s largest employers.

- From Australia comes a suggestion that we adopt a principle agreement recently forged between Federal, State and Local government that when a responsibility is devolved to local government, the financial and other impacts on local government are taken into account by central Government.

If this system was adopted here, then recent devolved responsibilities would include a financial arrangement with central government.

“With Australian cities facing similar capital development pressures as Auckland, the Federal Government agreement of last April is a refreshing display of the importance all citizens are seen to have to fund nationally iconic projects and infrastructure, and not just expect local rate payers to carry the costs,” said Mr Barnett.

“With a similar principle-based approach here, we would probably be taking a different view on how projects like Eden Park’s redevelopment, Auckland waterfront and Museum, our nationally important roads and public transport, are funded,” suggested Mr Barnett.

In Canada, a similar “whole nation, intergenerational responsibility and duty” approach is evident. The British Colombia provincial government in 2003 put in place legislation agreeing to a set of principles to guide its relationship with local government. The principles include:

- The Provincial government must not assign responsibilities to municipalities unless there is provision for resources required to fulfil the responsibilities.

“If the Canadians can do it and the Australians are starting to do it, why can’t we?”

Other ideas include:

- Greater use of debt funding and spreading the costs more fairly to include future generations of ratepayers.

- A unitary system for co-ordinating the delivery of basic core services of transport, water and sewerage would save rate payers millions of dollars.

- Creating a single billing system for key services, rates and consenting processes.

“It is refreshing to see that many Aucklanders agree that there is considerable scope for greater use of common sense and a fairer spread of the cost of moving Auckland forward. We have an opportunity to apply some fresh thinking to solve our problems, our challenge is to get ourselves organised and into a frame of mind to grasp these ideas and suggestions and action them,” concluded Mr Barnett.

“Let’s keep the new ideas coming forward….”


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