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Heather Roy's Diary: Local Government Rates

Heather Roy's Diary: Local Government Rates

Every year, around June and July when council plans for rate increases are announced and people start receiving increased rate demands in the mail, we receive a large number of letters and emails about local body rates. While increasing taxes is commonly considered political suicide, it is not uncommon for rates to rise at many times the level of inflation. The letters we receive tell us how rates hikes are squeezing not only working families, but especially pensioners and people on fixed incomes.

Over the last few weeks, as the letters poured in, the New Zealand Herald has run an excellent series of articles about Auckland City Council residential rates rising 13.8%. Less openly discussed but equally as relevant is the fact that council revenue (mostly from rates) is also increasing in the provinces - 19.3% in Tauranga, 15% in Central Otago, 15.7% in Nelson, 14.6% in Thames-Coromandel and 12.5% in Franklin in the 2006/07 financial year.

Rodney Hide's Bill To Cap Rates Increases

Early this year, ACT leader Rodney Hide's proposal to cap increases in council rates was drawn from the parliamentary Ballot. Rodney's bill - the Local Government (Rating Cap) Amendment Bill - had its first reading in Parliament on Wednesday this week. The only way for individual MPs to put forward a bill for consideration in parliament is to enter it in the Ballot that is held when there is a gap on the order paper. Those lucky enough to have their bill drawn then have the opportunity to debate it.

Private Members Bills, as they are known, take a long time to pass through Parliament's system because they have to wait for a “Members Day”, which only comes around about every two weeks when parliament is sitting. Even on Members Day, Bills have to compete with other business - this week this included the Prime Minister's statement on Lebanon which was commented on by all parties and Jim Sutton's valedictory speech.

When Members Day is over, if a Bill hasn't finished, it is held over until the next Members Day. Unfortunately, that has been the fate of Rodney's Bill, and having had only about 45 minutes of debate, it will go back on ice until August 23. The long delay is because we have a parliamentary recess between Members Days.

Being a Member of Parliament under MMP is a constant test of diplomatic skill. No party has the numbers to get anything passed by themselves. For this Bill, National, the Maori Party and United Future have promised their support, and only New Zealand First's dissent stands in the way of a Select Committee calling for public submissions and giving all New Zealanders have the opportunity of having their say on this issue. Going by the number of emails we have received in the ACT office this is something that Kiwis feel strongly about.

What The Bill Does

The Local Government (Rating Cap) Amendment Bill would limit increases in rates to inflation plus 2% in any year, and inflation plus 4% over any three years. Exemptions to the cap could be granted for particular projects with public support. Similar limits to the growth of local government are working in many other places, including Sydney and London, where experience shows that having clear limits makes local government more accountable to the people they serve.

Instead of dreading the arrival of their rates demand, people would know what they can expect to be charged, and how it would be spent. Rather than just dipping more deeply into ratepayers' pockets, councils would have to budget and prioritise, like families do.

Central government would also have to cut back the list of roles and duties it's loaded onto councils, and let councillors focus on what is really important to their communities.

Rodney admitted during his introduction of the bill into parliament that his proposal is not perfect. But ACT believes this is an important issue and one that should go to select committee to allow Kiwis to have their say. The debate Parliament is having has made politicians listen to ratepayers' concerns and think about smarter alternatives for funding local developments.

What Happens Next

Among all the lobbying, ego and politics, sometimes MPs need feedback from the public to remind us of what's really important.

Now we have almost a month to gather that feedback and convince New Zealand First to change their mind, so we can open up public debate.

I would welcome your feedback about rates, and also invite you to let New Zealand First know about the impact of high rates bills on our community.

As always, you can write to me freepost at Parliament Buildings, Wellington, or email heather.roy@parliament.govt.nz. New Zealand First MPs can also be written to at Parliament, or by emailing nzfmp@parliament.govt.nz.


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