United Future – Local Body Rates and Alternatives to the Current System

Saturday 4 November 2006

Good Morning. I am delighted to welcome you all to Christchurch. Of course, it’s a welcome home to Peter Dunne who grew up and went to school here, but for some inexplicable reason abandoned our fair city for Wellington. His brother, John, is a much more sensible fellow. He has stayed here and is one of our local radio personalities. As the Jesuits say, “Give me the child and I will give you the man”. The Marists, in this case, did a good job with them both!

My political antennae has been activated by this talk from parliamentarians of local body rates being too high. Is this a case of Members of Parliament finding something they can throw some mud at without any mud sticking to them?

What about all those extra costs Parliament imposes on councils. Dog chipping, the prostitute legislation, swimming pools fences, the increased quality standards for things like air and water.

Of course, the Labour Party knows how to save tax, it seems to be writing off its entire third term.

Telecom charges forty odd dollars a month for a telephone line and if your throw in another $40 a month for broadband it comes to $960 a year for telecommunications. Christchurch has an average rate of $1,200. This pays for sewage, water, roads, parks and libraries, etc. When I compare that to it what it costs for privately owned utilities I think that we serve our ratepayers very well.

Over the last few years Council has been through a process of improving service to customers and improving efficiency. We have been given a clean bill of health by Audit New Zealand on our Long Term Council Community Plan, and recently the Council was awarded the New Zealand Excellence Award in the local government sector. I think we can be proud of our achievements.

However, I digress. What are the alternatives to our capital based rating system? Well perhaps Parliament should look to itself. Local Government is bound by the Local Government Rating Act. It doesn’t give us a huge amount of leeway. A capital based rating system meets the KISS principle it is simple and it means those who have more pay more. No different from income tax.

But there is one big difference because the rates tax paid by property owners to local government, are taxed again by central government. Is this fair?

What about the cost of services imposed by Parliament. If Parliament says we must provide extra services, then shouldn’t central government make provision to pay for them. Instead of hiding the true cost of their legislation in local government rates.

Central Government gives us very little. We get a bit in child care subsidies, and we also get around two and a half million in petroleum tax. Transit NZ give us a small share of the monies they have from petrol tax and as a Council, however, we have had to fight tooth and nail to get any money from major projects in recent years. It appears the South Island is paying for lack of infrastructure investment by successive Auckland Councils.

Rates rebates go to the ratepayers. Christchurch City Council has been successful in encouraging 7,500 plus residents to apply for a rates rebate under the government rates rebate scheme. The average rebate was around $450. To achieve this Council got little help in publicising the rebate. Internal Affairs supplied a leaflet that turned out to be next to useless.

The feeling is that the numbers should be closer to between 15-30,000 applying for a rebate. Greater resources need to be put in place to publicise the rebate. Why doesn’t government do more? It’s seems that this is just another example of placing the burden of the cost on rate payers, giving with the one hand and taking with the other.

There are targeted charges, however, we as a Council have not been too keen to go down that road. For example, we have a policy that everybody should be able to get a book out of the library free of charge, and the recent outrage that followed the proposal to close a couple of libraries says to me that residents want a free library service.

Then there is a citizens tax. We all know what happened to Maggie Thatcher when that lady would not be turned from a poll tax policy. Michael Heseltine challenged her leadership and, although he did not roll Maggie immediately, she resigned shortly after. She should have learned from John of Gaunt whose tax of a shilling on every citizen caused the Peasants Revolt.

A poll tax means trying to keep track of every citizen, finding out who is sleeping in whose bed. It is a bit like taking a census on a rabbit farm. Very difficult, very expensive and very bureaucratic.

So what are we left with. If Government spent the full amount of petrol tax on roading maintenance and capital and not the current 50%, and divided it out proportionally to all of New Zealand, it would mean benefits for all. This, of course, puts the ball back in the Government’s court.

Christchurch has been very prudent. We have kept our infrastructure companies, the Port, the Airport, etc. These keep our rates down by around 15%. The profits from Christchurch City Holdings Ltd have also given us the ability to look at investing in the future, for example, dark fibre broadband which is essential for the modern global economy which the monopolistic private sector has been reluctant to provide.

Council owns the second largest pool of rental housing after Housing NZ. The housing stands alone financially and is not supported by ratepayers. We are a Council that is pro-active in our community, supporting local organisations that support our citizens.

Then there is the expectations of ratepayers. The submitters to our Long Term Council Community Plan tended to be asking for more services not to pay less in rates. Recently, there has been some controversy over the closing of a local swimming pool that was broken beyond repair and had a small clientele. The fact is that people are voting with their feet and using the Council’s leisure centres with modern indoor facilities. They want gyms and our people are educated, urbane, many have travelled widely and they have high expectations, and we want to keep them here.

Christchurch is a trading city, we are a city state. We compete on a global scale for the skills of our young people and if we want them to stay home we need to provide an environment that offers jobs and business opportunities.

One of our points of difference is the city’s lifestyle. This means the city must continue to maintain its infrastructure of roads, water and sewage, libraries, parks, and the new one on the block, telecommunications. Finding a fair and efficient way to fund this infrastructure is crucial for us.

There is a saying that the art of taxation is like plucking the goose and getting lots of feathers but not too much hissing. It is my hope that Parliament can find a fair and just way of providing Local Government the funding it needs without causing too much hissing. Best wishes for your conference. I hope you enjoy your time in our lovely city.

Ends