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Expect more of the same from Local Government

The controversy over the Auckland Regional Council rates rises reflects growing problems with the structure and spending of New Zealand local authorities, says Federated Farmers of New Zealand (Inc) Vice President Charlie Pedersen.

"Over the past decade rates payable by households have increased at almost twice the rate of other consumer prices. As Councils are limited to taxing property owners for their general revenue, they should in turn be limited in their ability to fund and provide social services.

"Furthermore Federated Farmers totally opposes social partnership with Central Government unless sound principles of taxation are applied.

"The Auckland Regional Council is faced with rebuilding a poor public transport system, yet depends on property taxes. While property owners are the only ones that can be taxed matters can only get worse.

"It is simply not appropriate for the property owners alone to be stumping up $168,000 a day to subsidise a social service that anyone can use and benefit from. Apart from issues of equity, rates increases are placing significant inflationary pressure on the economy.

"The key to the problem lies with the Government's refusal to contemplate changes to the way Councils raise general funds. This was made very clear to Federated Farmers made this point loudly and clearly when the Local Government Rating Act the Rating Powers Act was reviewed in 2001. The Government refused to change the basis of funding in the Rating Act and remained determined to lock Councils into a 17 century funding mechanism.

"Ironically the Rating Act was followed by the Local Government Act which gave councils extended powers. As the ratepayers of Auckland are now finding, the ARC has enormous uncapped powers to set rates for whatever they choose to do, but are restricted to taxing property owners to get the funds.

"The ARC problem goes far beyond arguments about the merits of capital value rating. The continuing allocation of new responsibilities to local authorities lumbered with outdated and unsuitable rating powers is guaranteed to produce controversy.

"I challenge all Councils attending the Local Government Conference in Queenstown to call on Government to urgently review the Rating Act. Otherwise, I warn all New Zealand ratepayers to expect more unaffordable local government schemes."

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