LGNZ has responded to the Government’s 4% rate capping announcement, saying it will have real impacts on the essential infrastructure and service councils are able to deliver for communities.
LGNZ President, Rehette Stoltz (pictured), described capping rates as “a blunt tool”.
“Councils can’t be expected to deliver more infrastructure, support growth and meet communities’ expectations with fewer levers – the maths just doesn’t add up and something will have to give,” said Ms Stolz.
“Introducing a 4% cap when councils’ costs are increasing at a much higher rate will hamstring already-constrained councils’ ability to maintain investment in the services and infrastructure that people rely on them to provide.
“Local government only gets 10% of the country’s tax take but councils are responsible for about a third of all public infrastructure investment in New Zealand.”
Ms Stoltz said that while rates capping constrains income, the Government was not addressing the drivers of costs.
“In fact it’s making things worse by passing on the costs of government reforms to councils and ratepayers,” she said.
“Official estimates show local government is facing around $860 million in implementation costs to get the new resource management system up and running.”
She cited Australian local government examples where rates capping had failed.
“In New South Wales, rates caps resulted in a $201 million maintenance funding shortfall across 62 councils in a single year. Just 46% of councils had sufficient funds to maintain acceptable building and infrastructure renewal levels.”
“In Victoria, rates caps caused a reduction in GDP of up to $890 million.
“What we see in Australian states with rates capping is councils frequently end up applying for large ‘catch-up’ rate increases after years of constrained revenue.
“That is not sustainable. We are keen to work with central government to tackle the drivers of costs and find efficiencies. A rates cap will not deliver that,” Ms Stoltz said.
