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Rates rises only a symptom of the real problem

Media statement
For immediate release
Wednesday, 23 August 2006

United Future: rates rises only a symptom of
the real problem

United Future leader Peter Dunne says the current furore over the high level of local body rates rises is missing the point.

"United Future will support ACT leader Rodney Hide's Bill that seeks to cap rates to select committee because it's a first, crude, attempt to address the problem.

"Even Mr Hide however readily concedes his Bill's a very inadequate weapon to deal with the problem of burgeoning rates bills.

"And the select committee inquiry into rating methods that will be launched tomorrow will no doubt do valuable work, but will fail to address the real question, which is the fundamental structure of local government in New Zealand," said Mr Dunne.

"Currently we have 12 regional councils and 74 territorial authorities, 16 of which are city councils.

"As at June 2002, local authorities contributed 2.8% towards the total GDP for New Zealand. In 2004, their total annual operating income was $4.625 billion, while their annual operating expenditure was $4,370 billion.

"Total annual capital expenditure was $1.983 billion in 2004. The local authorities own assets with a combined value of $62.788 billion, including 87% of New Zealand’s roads, and owe approximately $3.521 billion in liabilities.

"Of the $4.625 billion received in operating income, 57% came from rates, 12% from central government assistance, 6.5% from investments, 5% from fees and fines, and 19.5% from other sources.

"Of the $4.370 billion spent by local authorities, almost 50% goes towards purchasing goods and services, around 25% on employee costs, 20% on depreciation, and 5% on interest and grants. Land transport made up the largest single expenditure category, accounting for 26% of operating expenditure.

"What's really needed is an independent commission of inquiry into local government, which would hopefully result in a much more streamlined local government sector, with far fewer local body politicians, much better qualified and trained staff and much greater economies of scale.

"Such an inquiry could also attempt to define those basic core services that local bodies must provide and also identify those functions that have been delegated from central government and which therefore need a different and more adequate source of funding, without beggaring the ratepayers," said Mr Dunne.


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