25th January 2012

Huge CEO salary increases are devastating to ratepayers who pay the costs

Rate-capping legislation needed now.

The latest outcry surrounding Council CEO salary increases demonstrates the need for greater control over council expenditure.

Many of the salary increases include so-called ‘performance bonuses’ – but few, if any, councils include in their performance standards a requirement that rates are held to minimum or nil increases.

Ratepayers have no control over the salaries of elected members, council employees, or contracted consultants and operatives.

Although councils are required to ‘consult’ on expenditure through the Annual Plan process there is absolutely no requirement for councils to respond positively to ratepayer concerns.

This latest round of excessive CEO salary increases will be met with renewed ratepayer demands that central Government intervene and put legislative controls on council rate increases.

While it may be difficult to institute ratepayer control over individual salary increases it would not be difficult to introduce ‘rate-capping’ legislation’.

Such legislation was introduced to Parliament in 2007 but did not proceed because Winston Peters New Zealand First Party voted against it.

In that same year the Independent Rates Inquiry reported that the current rating system would become ‘unsustainable’ for some groups of ratepayers.

The recommendations of that Rates Inquiry have never been followed through.

New Local Government Minister Nick Smith should reopen that Inquiry and address the whole problem of what Local Councils should be doing – and how they should be funded.

ENDS

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