In the September/October BayBuzz magazine, just published, I take some 2500 words to review in depth the issues involved in funding the activities of our local councils, concluding:

“This article – in the present election climate – is intended to suggest that curbing rates is a complex task with no easy fixes. And to caution voters to be wary of candidates who claim otherwise. As the saying goes, we get the government we deserve!”

In the following brief piece, with a NZ Taxpayer Union debate coming up Monday for Hastings mayoral candidates, I want to zero in on just one aspect of the debate – rates capping, especially National’s plan to legislatively cap rates. 

National has been berating local councils for months now, portraying them as out-of-control, irresponsibly wasting ratepayer dollars on non-core vanity projects.

National plans to impose by law some sort of still-undefined cap on council spending (neither ACT nor NZ First are keen on this), linked to the consumer inflation rate, as a means of restricting them to ‘core’ functions.

BayBuzz asked all candidates standing for our HB councils whether they supported a legislated cap. You can read the responses of nearly 100 of them in our Election Central.

Only a handful did support a rates cap. Don’t vote for any of those. They are clueless about the fiscal realities confronting our councils … and the funding viability of local government generally. Bad enough if any of these win a council seat; frightening if one is elected mayor of any of our councils.

A bigger block of candidates hedged, saying ‘Maybe I could support if …’. Then identifying a variety of pitfalls with a poorly constructed, rigid ‘cap’ that would in fact impede spending on essential infrastructure maintenance and improvement (worsening an already failing situation), and possibly even force abandonment of ‘core’ activities. To say nothing of objections many posed to Wellington dictating local priorities.

In fact, for those and more reasons, the majority opposed any legislative cap outright.

More on the reasons …

  • HB councils in particular still face extraordinary cyclone recovery costs – repairing and ‘building back better’ roads, bridges, pipes and pumps, stopbanks. The material and contractor costs of completing that work are increasing at a significantly higher inflation rate than any consumer index.
  • These core costs are (must be) baked into our councils’ long-term planning, and necessarily require significantly higher debt profiles … with interest costs to be paid via rates over extended periods.
  • New sensitivity to disaster threats is driving much higher insurance costs for councils (just as it is for households). Another unavoidable rates driver.
  • Legislatively limiting NZ local councils’ ability to raise funds through rates will jeopardise their credit-worthiness in the eyes of authorities like Standard & Poor, which has sounded that warning. A concern that causes Treasury to advise ministers against capping.

Are there, nevertheless, savings to be demanded, sought and achieved? Of course. Every HB council made undeniable efforts to identify and eliminate these in recent budgeting reviews, achieving $$ millions in cuts. And these efforts must persist. But they are incapable of limiting rates increases equal to consumer inflation rates. Were that to be attempted, the reduction of service levels in core council activities would cause public panic.

The fact is, local government financing is broken, not fit for purpose, and in fact the situation is worsened by a variety of central government policies and practices.

So, it is supremely counter-productive to intelligent public debate over local government funding when an organisation like the NZ Taxpayers Union comes along demanding that candidates here in HB and across NZ sign a ‘Ratepayer Protection Pledge’ including this commitment (or be declared unfit for office):

“I will oppose any measures that will see the total burden of rates, levies, and additional council charges, exceed the level of inflation and population growth.”

To press their point, NZ Taxpayers Union is sponsoring a Hastings Mayoral Candidates Debate this Monday, 8 September, 7p at the HN Function Centre.

Based on mayoral candidates’ replies to BayBuzz questioning on the subject (all viewable here), I would expect only one, maybe two, of the five candidates to endorse the pledge statement above.

Should be an interesting evening!

  

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12 Comments

  1. Politely disagree with your statement, Tom, BayBuzz asked all candidates standing for our HB councils whether they supported a legislated cap. You can read the responses of nearly 100 of them in our Election Central.
    Only a handful did. Don’t vote for any of those. They are clueless about the fiscal realities confronting our councils … and the funding viability of local government generally’.
    The advice of a media outlet to not cap rates because they rely on their funding from said Councils is very biased. However, vote only for those who will cap rates. Councils will then have to live within their means like the rest of NZ has had to because said Councils won’t cap their rates. Vote for change in October, people. Tom, if the funds run out, it’s been nice commenting and sometimes being published when it suits you.

  3. Capping rates is only the start
    Then we need a Forensic Review of Council Spending

    During my door-to-door campaign across Hastings, numerous council insiders and residents have raised serious concerns about how our council spends ratepayer money. These aren’t just idle complaints—they’re specific allegations that demand answers.

    When I formally requested information under LGOIMA about an alleged $400,000 bailout of a non-council entity for unpaid rent, the council denied it outright. I’ve also inquired about claims that the CEO welcomed a new business to town with $500 in cash from ratepayers’ pockets—money allegedly used to buy staff morning tea.

    As economist Milton Friedman wisely observed, **“I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it costs, and I’m not concerned about what I get. And that’s government.”** This perfectly captures the problem—when council spends ratepayer money, there’s often little accountability for either cost or outcomes.

    The real problem isn’t just whether these specific allegations are true. It’s that council staff feel they can’t trust the system to address concerns properly, and our community has lost faith in how their hard-earned rates are being managed.

    **As your Mayor, I will immediately order a comprehensive forensic audit** covering:

    – All petty cash expenditure
    – Tenancy deals and arrangements
    – Any bailouts or financial assistance
    – Consultant contracts and expenditure

    No more secrets. No more whispered concerns. Just the truth, delivered transparently to the people who deserve it.

    If dishonesty is uncovered, those responsible will be held fully accountable. I give you my word that decisive action will be taken.

    In my 24 years of policing experience, I learned that where there’s smoke, there’s usually fire. It’s time to clear the air in Hastings.

    With ratepayers doing it tough in these challenging times, we must be meticulous stewards of every dollar we spend. You deserve nothing less than complete transparency and accountability from your council.

    **Steve Gibson**
    *Mayoral Candidate*

  4. Great news about capping rates
    Curia is doing an independent poll on behalf of the tax payers union to see how the Mayoral canditates in Hastings are tracking.

    It will be released monday night at the Mayor forum, Magdalino rooms Havelock North 7pm

  5. Wonderful – let’s cap the rates and watch core services collapse – anybody who believes costs won’t rise (probably even above ordinary inflation) lives in a different world to those of us having to pay the bills. Maybe they’re all like our Prime Minister “I’m wealthy so I’m sorted” Luxon. We live in a world where costs keep rising regardless – or do these people think that just saying we’ll cap rates will automatically stop the cost of, well, everything, going up. With capped rates that would mean that, as the cost of goods and services rise, the councils will have to start chopping their expenditure which will mean stopping, let’s say, mowing the parks and stopping the pick up of flydumped rubbish on the roadsides. Or something similar. It’s a fact of life these days – costs increase, income decreases in proportion. Capping will lead to cuts in services – it’s inevitable!

  6. Great comment Gerald, Tom your out of touch with your readers and rate payers. People can’t save enough to pay for any more rate increases, the system is maxed out!

  7. Im going to support the ratepayer revolt. Lets see how councils fare when ratepayers withhold rates.

  8. There may well be riots if rates are capped and essential services are then not delivered, or if those candidates are elected then have to uncap rates.
    Clearly more money is needed; there is a plea to Govt to address this. I believe that in Australia, half of the GST from tourism is returned to the region; that would help

  9. Councils in HB are convinced that they have cut (most of) the fat. However, many, if not all of councils’ processes and thinking have generic ‘fat’ built in and is regarded as ‘essential’; it’s a state of mind developed over years of bureaucracy creep which many simply can’t ‘see’ and or refuse to acknowledge. Just cutting core services, will not solve the low value for money (our rates) equation; it requires a thorough re-think how to ‘do the work’ and finance local government – if capping rates is needed to effectuate that, so be it.

  10. Likewise I am finding door-knocking on the Ahuriri ward, that the number one concern of the people is the cost of living crisis and the financial stress caused by rates rising well above the level of inflation. People are losing their jobs and having their hours cut. Some are saying they fear being “rated out” of their homes, they tell me they spend “half their retirement income on the rates”, they worry whether they will ever be able to retire… As someone standing for election in order to represent the will of the people, it would be disingenuous of me not to support a rates cap.

    You can only squeeze people so far before they default, then how do we balance the books? A rates cap (tracking CPI or GCPI) is a realistic way for the Council to be brought to heel by rate payers. It is about good budgeting.

    Many constituents are fed up and cite examples of wasteful spending and question the ethics of those in charge. If I were confident that the people in power were following the 7 Principles of Public Life I wouldn’t be standing. Look them up, the Nolan Principles, I am independent and not following anyone else’s agenda or formula other than listening to the people and committing myself to those ethics, with the expectation that those around me follow them too. It probably won’t make me popular, but that is what I would want in a representative.

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