are going to support the call spearheaded by Labour’s Christchurch Central MP Duncan Webb here for the City Council to increase its rates from the proposed 3.5% to 4.65% as a means stimulating the cities economy to deal with fallout from the pandemic? Not too many I suspect.
No matter that thousands of ratepayers will have lost their jobs or are having to make ends meet on a reduced income. Webb is indicative of those on the left who believe that money grows on trees and that you can tax the way to prosperity and if people get hurt on the way then they should realize its for the greater good and be thankful.
Great example of an out-of-touch mindset totally divorced from reality.
Is this indicative of what we can expect from a reelected Labour/Greens government … fair question.
No Minister 
Even if you haven't lost your job, a 3.5% rates increase is unsustainable under current conditions (low inflation; 1% or less annual wage increases). Rates are becoming way too high for many, myself included.
As a general principle, yes, increasing taxes including rates in a recession is not the way to go. But the issue as I understand it here is that central government is rightly concerned that local government will not fund its share of the increased spending required (as per Keynesian theory used after the GFC) to ward of the worst effects of the coming recession in their regions. Instead, they will just spend up regardless and not make the publicly unpopular decision to increase rates which will be needed to run a good balanced fiscal policy that compliments, rather than blushes off central government. Hence, what the central government politicians are wary of is local government in a few years time having huge deficits for which, as per the principle “too big to fail”, the taxpayer will have to bail them out…when they could have raised rates to decrease the budget blowouts. And if there is something that local body politicians love – and are able to get away with more easily due to decreased media scrutiny and public interest in their activities – it is “all care, no responsibility“.So the good people of, say, Southland or Hawkes Bay will pick up the tab as tax payers due to the lack of genuine fiscal responsibility of Auckland or Wellington local body politicians.
Kimbo good analysis but I suspect the future is here now in that most of these council's balance sheets would not survive close scrutiny and that they are technically insolvent.Auckland is half a billion down the toilet and from a mate who works there savings demands are going out to the various departments. Most of those savings will fall on employment.You have to wonder how much of it is bad policy decisions made over the years with council becoming involved in non core activities. Just look at Wellington.I dont blame Rogernomics for this mess. Reform of Local Government was entered into with the best of intentions but the law of unintended consequences has won out.Back in the day you would ask a guru what mechanisms are going to keep Councils making sound decisions. The answer back was balance sheet and 3 year election cycles. Both have turned out to be poor assumptions.Paying market salaries was supposed to attract the top dogs but as we can all see in most cases all that came along were the \”dogs\”!I bleat on about it but in my view Local Govt reform should be one of Nationals main planks. Mind you I never did have a tight grip on political reality!
Rossco, you forget the “reforms” that led us to this dire situation wasn’t Rogernomics but the Clark/Cullen government ‘reform’. For example: Who would have ever thought giving the power of general competence to local government would lead to poor outcomes?Paranormal
Paranormal … IMHO giving Councils the POGC was one of the worst decisions ever made. Trust us was the cry … we'll do the right thing and if we get it wrong you can hold us to account. The result … Councils went on a spending spree characterised by poor quality spending on things like establishing sister city relationships providing 'jollies' for the incumbent Mayoral favorites. At a certain point the money flow stops (eg Auckland where the Council has exhausted its ability to borrow) and Council is forced to go cap in hand to central government (the taxpayer) for additional funding). My mentor in local government was a self made millionaire whose view of his fellow Councillors was that they would argue to the cows came home on something costing $10,000 because that was a figure they could relate to but to expect them to critically appraise a project costing $1m+ and their eyes would gloss over and accept the official's advice.Nothing much has changed.
@ VetThe tyranny of small decisionsa phenomenon explored in an essay of the same name, published in 1966 by the American economist Alfred E. Kahn.[1] The article describes a situation in which a number of decisions, individually small and insignificant in size and time perspective, cumulatively result in a larger and significant outcome which is neither optimal nor desired.
OK so as I say we need to reform it in reverse… is that deforming?Put it back the way it was plus a whole raft of regulation and control based on a well defined core business strategy.Where possible force them to sell asssets to pay down debt, eg Wellington AirportIts boring, mundane stuff but someone has to do it. (long as its not Rodney Hide 🙂 )
… IMHO giving Councils the POGC was one of the worst decisions ever made.I assume you're talking about the Local Government Act circa 2002?? I think Labour's Sandra Lee was in charge of putting it through the House?Anyway, I saw it at the time as a an effort by Labour to make sure that even during times when they were out of power in central government, their many minions in local government would be able to carry on \”the good work\”!!!As such I wasn't surprised when National failed to roll it back, but in the case of Auckland actually picked up the whole Super City idea from the Clark government and ran with it. Just nuts; laying the groundwork for the likes of Goff and company to gain even greater power simply by winning a \”local\” election.Oh well. So goes NZ.
Tom … Rodney Hide, ACT, Minister of Local Government, his baby.