News

Rates increase to meet community demands for better services

The cost of maintaining and renewing major infrastructure, such as potable water, waste water and transport, is the single most significant factor in rate rises according to Local Government New Zealand...

Communities are demanding higher levels of service from local government. The delivery of first world service carries a cost and currently those costs are largely paid for by property taxes.

Local Government New Zealand surveyed several district and regional councils identified as having the largest percentage rate increases for the 2003/2004 financial year to determine the reasons behind the increases.

The reasons for rate increases are generally consistent across the councils interviewed. They include:

- Water supply and sewerage up-grades to meet nationally imposed quality standards. Almost all councils surveyed proposed significant new expenditure in this area.
- Increases in general running costs, especially electricity and insurance.
- A general move within the labour market to employ highly-skilled workers and the need to employ new staff to meet the requirements of the new Local Government Act.
- Increased allocation of funds to cover the asset depreciation requirements established in the Local Government Act.

Another factor impacting on rates is changes in the law, such as the new consultation requirements of the Local Government Act and proposed changes to dog control, building control and new regulatory functions dealing with prostitution and gambling. Councils are budgeting now for the expected costs of implementing new functions.

Despite this the Local Government New Zealand research showed a relatively modest change in rating levels in most councils.

"Nobody likes rate rises, but the fact is many New Zealand towns and cities are facing, or about to face, massive infrastructure costs either because of the need to renew aging systems in our older cities or because of the pressures of urban growth," says Basil Morrison, President of Local Government New Zealand.

"I'd like to paint you a picture of a typical urban resident. They will get up in the morning and carry out their usual ablutions. They will then fill the jug with water from the tap for their first cup of tea. While the kettle's boiling they put out their rubbish on to the roadside. When they leave for work they generally walk along the footpath to the bus stop where they catch a bus to work, or use other forms of transport that require rate funded infrastructure as well. They will eat their lunch in a park, reading a book borrowed from a local library. Local authorities are responsible for all of these services. These are services that impact severely on our quality of life," says Mr Morrison.

"Communities are demanding that their local authorities provide them with the best possible services. New Zealanders expect clean water, sewerage systems that don't leak or pollute and efficient road and public transport systems. Meeting those legitimate expectations sometimes leads to hard decisions," says Mr Morrison.

Local Government New Zealand strongly supports the right of every local authority to make decisions about the level of its rates, in consultation with its community.

Rates are one of the few revenue streams open to local government to meet these increasing costs.

"Local Government New Zealand will be discussing the issue of funding for local government with the Prime Minister and her cabinet at the next Central/Local Government Forum. We hope at that time to open the debate around alternative forms of revenue for local authorities," says Mr Morrison.

The process by which local authorities set their rates is laid down in statute and requires substantial community consultation, the application of clear criteria and is subject to judicial review.

The Local Government Act strengthens local democracy and allows citizens to have a great deal of say in how their communities are run.

Ends

For more information contact:
Beth Houston, Acting Communications Manager, Local Government New Zealand
Ph: (04) 924-1217
Mobile: (029) 924-1202

27 August 2003