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Rural lobby seeks Hide's ear on local govt funding review

Fuseworks Media
Fuseworks Media

Wellington, Oct 6 NZPA - A big rural lobby, Federated Farmers, says it is battling for changes to the way that councils are funded.

The federation has been telling voters --and candidates -- in the local government elections that the current rating system based on property values needs to be reformed.

National president Don Nicolson, who farms at Waimatua, southeast of Invercargill, told NZPA that so far there had been no signal from central government suggesting serious funding reform, "only sympathetic noises from individual MPs".

But he said lobbyists had gained the ear of Local Government Minister Rodney Hide -- the ACT Party leader -- for a "first principles" review of local government funding.

The goal was law changes to reduce local councils' reliance on the existing system of land and capital value rates -- where only a part of the community directly pays rates, money which the federation complains is then allocated unfairly.

Such a review was vitally important if further amalgamations like that in Auckland were to happen.

"The Auckland amalgamation would have been made easier if funding policy had been first sorted," Mr Nicolson told NZPA.

The federation had issued its own local elections manifesto, arguing that councils should do what their ratepayers have to do: make do with the money they have, rather than constantly asking for more.

Rather than having council rates based on income or services received, rates were based on the market price of land and sometimes its improvements, the federation said. Many average-sized farms were now paying more than $20,000 in general rates, which was "grossly unfair".

At local level farmers had argued that rates based on property value were unfair, as were the "unfettered" powers of councils to allocate the spending.

"We have been heartened overall, however, by the many candidates advocating cost restraint and reduction, as opposed to new dreams and schemes," said Mr Nicolson. Some candidates were calling for rates to be based on services and benefits and not property value, for more user pays, and for rates increases to be constrained at or below the rate of inflation.

Rather than councils viewing rates as a tax that goes up and down with property value, the federation wanted a greater emphasis on targeting rates and revealing who in the community pays.

Some councils now provided itemised rate demands to show the cost of individual council services, and more were providing tables of rating examples in their financial plans. But while some of the provisions of the Local Government Act 2002 Amendment Bill were encouraging, improved transparency "will not resolve the fundamental problem of a layer of government funded by opaque and inequitable property taxes".

The federation had rolled out a general proposal that rates paying for roading should be based on actual use and impact, but Mr Nicolson said this represented a "seismic shift" in thinking.

"There will be a lag before any uptake," he said

Roading cost "allocation models" could help make rates funding local roads sustainable, but they were only a halfway house to the real solution, "which is for the financial assistance rate from government to be raised".

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