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Terms of Reference for local government rates fund

Media Statement

30 August 2006

Terms of Reference for local government rates funding inquiry

The whistle must be blown on local authorities who are getting rich off the backs of ratepayers who can no longer afford the burden of cost, according to the Property Council of New Zealand.

In releasing the Property Council’s preferred terms of reference for the independent inquiry into issues around local government rates funding, National Director Connal Townsend said a comprehensive investigation of the poor financial stewardship of local government generally is long overdue.

“Hundreds of thousands of ratepayers are falling victim to flabby, inefficient and poorly governed local authorities who wantonly increase rates and waste money. Hundreds of millions of dollars will this year pour into local government treasury coffers. It’s about time that local authorities who are enjoying that cash windfall are held accountable for what they are collecting.

“The government’s pending independent inquiry into local government rates funding issues could provide an opportunity for a thorough investigation of development, funding and rating policy issues relevant to the local government sector. The Property Council’s members, along with thousands of other aggrieved ratepayers, are ready and willing to provide evidence that will undoubtedly assist the inquiry,” Connal Townsend said.

The Property Council has suggested the following terms of reference for the forthcoming inquiry:

1. the abuse of development contributions and financial contributions as funding tools applied by local authorities;

2. the continued practice where local authorities apply a cost-plus financial policy, which favours rates

increases rather than cost-savings; 3. a lack of analysis of the implications (e.g. housing affordability and inflation) of development, rating and funding policies pursued by local authorities;

4. the increase in administrative and compliance responsibilities devolved to local authorities pursuant to different statutes;

5. the role and function of the Local Government Commission (in particular, its role in promoting good practice relating to a local authority or to local government generally); and

6. the role of the Department of Internal Affairs (DIA) as the government department primarily responsible for providing advice to the Crown pertaining to local government matters.

“The Property Council’s suggested terms of reference have been communicated to all parliamentary parties.

The financial health of thousands of businesses and residential ratepayers are on the line because they are being forced to pay skyrocketing rates bills. It is a national outrage, which must be thoroughly investigated.

“The local government sector has emerged as a key source of national inflationary pressure. The development contributions policies of many local authorities jeopardise the ability of new families to buy their first home. And massive rate increases mean many existing ratepayers now face losing their homes and businesses,” Connal Townsend said.

ENDS

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