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Local government assets review backed

Media Release July 14th, 2000

Local government assets review backed

The Northern Employers & Manufacturers Association is endorsing Local Government New Zealand's call for a review of asset depreciation under the Local Government Act. At its Annual General Meeting, local government voted unanimously for such a review.

"Local government has a sound case for the review," said Alasdair Thompson, EMA's chief executive.

"The wording of the Act at present is leading to unintended and perverse consequences.

"In our analysis of the draft annual plans of 9 local authorities earlier this year we found councils had increased their rates unnecessarily to fund both the maintenance and depreciation of their assets.

"For example, we are supportive of the Waitakere Council's intention in its Long Term Financial Strategy not to fully fund its depreciation requirements as this would not jeopardise the maintenance of its assets. "Councils' asset management plans should be driven by their need to maintain and replace their plant and equipment, not by arbitrarily applying an imposed accounting formula.

"The review may well result in a reduced rates requirement.

"Our endorsement includes a note of caution. In the past some local authorities deferred maintenance to keep a lid on rates increases. They mined their assets to look good by keeping rates temporarily low.

"Ratepayers want to see local government employing clearer and more responsible financial management principles, hence our support for this initiative."

Further Comments: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme) 025 982 024

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