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Council Fiscal Responsibility Needs To Be Balanced By Prudent Spending

“At this time of uncertainty, we must balance the requirement for councils to exercise fiscal responsibility with the need to continue to invest in key infrastructure projects,” says Property Council New Zealand chief executive Leonie Freeman.

“Ratepayers face an uncertain immediate future, and local government must adapt by minimising rate increases wherever possible. However, it is also critical to our economy that key infrastructure projects continue to progress in order to maintain the workforce that will be needed long after COVID-19 has left the headlines.

“The local government Annual Plan process of setting rates for the 2020/21 Financial Year is now underway. With many proposed rates increases exceeding 5% and some in excess of 10%, the draft Annual Plans need to be adjusted to a level that is fiscally responsible - ideally at the rate of inflation - leading into a predicted global recession.

“Initially we expect local government will focus on maintaining essential services such as core infrastructure upgrades to water services and roads during the lockdown. However, we ask that councils be prepared to kick start projects once the restrictions are eased. This includes identifying and supporting private sector programmes and projects that can be fast tracked.

“If we have learnt anything from past economic recessions, it’s that they do end, and history proves that having a mobile workforce ready to capitalise on opportunities for rebounded growth is an important part of recovery. We saw this after the stock market crash of 1987 and after the GFC in 2008 – keeping people in work is key to recovery,” says Freeman.

“We urge local government to consider this balance carefully as they propose increases to rates across the country. This is a time to focus on needs not wants so that we are prepared for both recession and recovery in equal measure.”

The Property Council encourages local authorities to think outside the box when it comes to funding mechanisms, with the opportunity for rates relief or rebate options such as waving late payment fees and allowing delayed rates instalments to be considered.

“This will provide property owners with the ability to provide rent relief to their tenants, says Freeman. “The property industry is willing to take the lead in supporting businesses in these tough times however local authorities need to support this.”

“In the meantime, councils can leverage central government’s depreciation policy, allowing owners of commercial properties the ability to once again depreciate those assets. Local government will be in a better position to reassess rates and spending on non-essential assets at next year’s 2021-2031 Long Term Plan.

“We welcome further discussion and collaboration with the Government and local authorities as we continue to work together to find a solution that is fair, consistent and supports our communities as the situation unfolds.”

 

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