Editorial: Council reforms strike right balance

19:18, Mar 20 2012

Local authorities have only themselves to blame for the Government forcing them to live within their means.

During almost a decade in which rates rose at more than twice the level of inflation and the debt owed by New Zealand's 78 local bodies grew fourfold, councils have shown a disturbing lack of appreciation of the circumstances faced by their communities.

There was always a danger that in seeking to rein in councils, Local Government Minister Nick Smith would overstep the mark between central government regulation and local autonomy.

The reforms he announced on Monday appear to strike the right balance.

Limiting the purpose of councils to the provision of "good-quality local infrastructure, public services and regulatory functions at the least possible cost to households and business" will give a much sharper focus to the core responsibilities of local government.

It will not, despite the claims of some, stop councils from running public libraries, swimming pools, art galleries and museums or funding cultural and sporting events.


Dr Smith yesterday went so far as insisting that councils could continue providing housing if they wished, a clear indication he does not intend the legislation to be overly-prescriptive.

Of much more significance to ratepayers will be the measures requiring councils to control their spending and reduce debt.

That will be done by limiting annual increases in expenditure to inflation and population growth and setting benchmarks on "prudent" debt levels, to be agreed with Local Government New Zealand.

Crucially, councils will be able to go outside the spending and debt limits in emergencies, though the devil is in the detail as to what that will mean.

The paper setting out the reforms specifically refers to disaster recovery, but ratepayers will want assurances that it could also apply to unexpected infrastructure work or liabilities, such as those faced by Wellington for the leaky buildings fiasco and earthquake strengthening.

The changes also include a subtle tool to increase the heat on councils that fail to get their own organisations in order before looking to cut services or increase user fees.

It will give control of council staff numbers and salaries to councillors, rather than chief executives, and require annual reports to include the number of staff in $10,000 salary bands, as state agencies do now.

That move follows the huge increase in council wage bills after changes to the Local Government Act in 2002, which widened the scope of local authorities.

When the changes were implemented, the total salary bill for all councils was $884 million. By 2010, it had grown to more than $1.6 billion, an increase of more than 80 per cent. In the eight years before the changes, the salary bill increased by a total of just 8.7 per cent.

Local body politicians who complain that the changes proposed by Dr Smith go too far will get little sympathy from ratepayers.

They have watched their rates bills rise by an average of 7 per cent a year since 2002 while the debt councils collectively owe has ballooned from $2b to $8b. They have had enough.

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