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Save local government from crisis

22 October 2008

Save local government from crisis says Federated Farmers

The funding crisis affecting local government has shown the need for an urgent rethink on the narrow property based funding system it relies upon. Don Nicolson, President of Federated Farmers said:

“Councils are struggling to control costs and face ratepayer resistance to further rate rises.

“By 2016 it is estimated 40% of the population will live in rented accommodation. That means more people are consuming council services but less people are paying for it directly. Is that sustainable? Is that fair?”

Federated Farmers believes it is time to fundamentally rethink how local government is structured and funded. Compared to other OECD countries, New Zealand local government receives relatively little in the way of central government funding. Central government must come to the party and provide more funding to reduce rates, for example, by increasing its funding for roads, paying rates on Crown land, and providing a share of its GST revenue. Councils in turn need to think about how they can make better use of existing funding tools to reduce reliance on property rates, such as through increased user charging. Rates also need to be targeted appropriately to those who benefit from council services.

“Councils must cut their cloth to fit the economic times. This means the efficient provision of public services the community genuinely needs. Good roads, water and waste management should be their core focus,“ Mr Nicolson said.

“Councils have a wonderful opportunity to show leadership by capping or reducing the number of non-core staff, especially where they have fallen into social services under the grey area of ‘community well-being’. Councils need to ask hard questions about the value for money they derive from investing in tourism and the wish lists of special interest groups.

“Longer term, we need meaningful reform of local government funding. Rates are a blunt instrument and in today’s world, bear little or no relationship to use of a council service or even ability to pay.

“Federated Farmers challenges all political parties to take local government funding out of the ‘too hard basket’ and make it an election issue,” Mr Nicolson concluded.


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