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Pansy Speak: Those nasty rates bills

Pansy Speak

Those nasty rates bills

My in-box and letterbox are full of irate letters and messages from people throughout the country who are upset about the hefty rate increases they’re being faced with. Most of those who have written to me live in the area that the Auckland City Council looks after.

Senior citizens who are on pensions, or those on a fixed income, are finding their latest rates bills hard to afford. Grey Power on Waiheke Island says senior citizens have found the steep increase very difficult to fund. While the good news is that property values have gone up because the island has become a very attractive spot to live, the bad news is that the hefty rates increases don’t reflect the level of services these residents receive.

There seems to be no urgency on Labour’s part to address local government funding – their review on this issue has taken more than four years and the latest completion date they’ve given is October or November. Let’s not hold our breath!

It’s encouraging to see that councils have jointly agreed to commission a report to quantify the additional costs they incur due to legislation such as the Building Act, Prostitution Law reform, and changes that have been made to the Resource Management Act. National is keen to address the ever-increasing gap between council responsibilities and the funding they receive from central government to enforce legislation.

I first cut my teeth in politics by standing for the Canterbury Regional Council. From being a novice councillor I became chair of the all-powerful Finance and Expenditure Committee because of my accounting background and because, more importantly, there was a split between the two major political parties represented on the Council and my position as an independent became all-important..

Through my accounting skills I was able to convince management to implement zero-based budgeting. I was dubbed the ‘six million dollar woman’ because the Regional Council’s budget was cut by that amount. However, no one received any letters of appreciation from the public!

Elected members are approached by many different people who ask them to do many different things. There is always a strong temptation to help and it can be easy to get carried away with other people’s money. However, fiscal discipline is essential.

In terms of the current rates issue, National is supporting the Local Government (Rating Cap) Amendment Bill to select committee to enable the public to have their say. It is time for a select committee to review funding mechanisms, especially when hefty rates increases don’t reflect the services that residents receive.

What’s happened to the BOLD business tax review?

We can only hope that the results of the funding review of local government won’t be as underwhelming as the much trumpeted business tax review.

It failed to deliver a much-needed vision, to set any broad goals or propose a wide range of options for achieving those goals over time. What was also missing was how much money is available to spend on business tax measures or what the Ministers’ preferences were.

My colleague, finance spokesman John Key, has been considering a number of issues which need to be included as part of the business tax debate. The most important is the need for a strategy for any future changes to the company, personal and trust tax rates so that they are principled and co-ordinated. This review should have discussed the trade-off between aligning these three rates - as we used to do – and changing the various headline rates.

For New Zealand to grow, we need to make our country a more attractive proposition for investors and look at changes to the taxation of foreign investment. We also need to cut down on the costs of red tape by addressing the issues around compliance costs and the administration of the Tax Act.

It’s also essential that we consider changes to taxation which support innovation and start-up companies. This might include a 100 per cent write-off for all R&D spending, or a differential rate for new businesses. This could take the form of a lower rate of company tax payable in the first three to five years, as is the case in Singapore and the UK.

Pansy Wong


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