Smith takes aim at 'unsustainable' rate rises and debt
BILL MOORE
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Current rate rises across New Zealand are "just unsustainable" and his No1 concern is council spending and the financial burden on households and businesses, Local Government Minister Nick Smith said last night.
Dr Smith's annual speech to Nelson Rotarians was his first in the local government portfolio, and he used it to focus on council performance.
The Nelson MP is also environment minister and minister for climate change issues.
He warned that the Government might reintroduce debt limits on councils, and said everyone in local government, from mayors and chief executives downwards, must focus on getting better value for ratepayers.
Dr Smith said the country's 78 councils were responsible for $100 billion worth of public assets, had 23,000 staff, spent $7.5b of public money each year, and made thousands of decisions affecting the lives of New Zealanders each day.
"If they do these jobs well, they can be a turbocharger for New Zealand Incorporated, but poorly and they become a handbrake on this country's success. My ambition is to work with councils to ensure they are a help, not a hindrance, to New Zealand getting ahead."
Rates across the country had been rising by 6.8 per cent a year for a decade, more than twice the rate of inflation and more than any other cost in the consumer price index, he said.
If they had gone up at the average rate of 3.9 per cent in the previous decade – before Alliance minister Sandra Lee overhauled the local government legislation – "the average homeowner would be paying $500 less in rates today than they are, or nationally, the rates bill would be a billion dollars a year less".
Dr Smith said most people would be shocked by how quickly councils had been racking up debt, which had grown from $1.7b to $7b over the past decade, faster than in any other sector and reaching unprecedented levels.
Nelson City and Tasman District were typical, he said. Nelson's debt had risen from $15 million to $51m, and Tasman's from $29m to $116m.
While the $8b of debt might seem low compared to $100b in council assets, "very little of these assets are income-generating, and fewer still could be cashed up", Dr Smith said.
The successful turnaround in ACC's finances while he was minister showed what was possible, though it was "a far more challenging job" to get local government costs under control.
Dr Smith said a fundamental change in culture was needed, but the Government was not going to embark on a nationwide programme of forced change.
He said it was important to note that the Local Government Commission's consideration of amalgamating Nelson and Tasman – with a report due out in a few days – was happening under existing law and process and independent of him.
Other plans Dr Smith floated in his speech included:
New laws to provide for environmental protection of New Zealand's huge ocean area, to take advantage of significant opportunities from minerals in the Exclusive Economic Zone "in an environmentally responsible way".
Improving freshwater management, with clearer rules for farmers, and progress on clean-up plans for polluted rivers and lakes.
A new Environment Reporting Act to "improve the integrity of New Zealand's green brand", aiming to establish a nationwide five-yearly report on rivers and lakes to allow better water management.
Further Resource Management Act reforms to address delays in medium-sized projects, strengthen requirements for councils to consider natural hazards such as earthquakes, and simplify the planning framework.
Slowing the Emissions Trading Scheme to phase in the next stages over three years and bring New Zealand into line with Australia by 2015. "We ... need to be real about the ongoing financial pressures on businesses and households," Dr Smith said.
He said December's floods and landslides caused the worst disaster to hit Nelson for a generation, leaving a massive job repairing 600 affected homes, "a good number of which will have to be completely replaced", and rebuilding infrastructure. A key issue for him would be ensuring good service from EQC.
He said that this year, he would aim to secure government money for a dedicated specialist teen parenting unit in Nelson.
He also wanted to make progress for Nelson in Cawthron Institute funding, extended broadband access, special needs education and tighter alcohol controls.
- © Fairfax NZ News
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Its all very well 'taking aim' Nick but do something about it.TDC are spending millions on their Ivory Tower at the very moment. Who pays for that?
As Nick and his mates are incapable of managing the economy I guess he's scuttled home to see if he can do some more damage. Yes, rates are unsustainable but they're managed the same way as central government - jobs for the boys, noses in the trough, projects going where the power is and the necessary things being ignored. As for ACC - it's a great scheme, a shame the true figures weren't properly released and this government misrepresented them by using projections rather than actual figures but that's what we've come to expect from these people.
"everyone in local government, from mayors and chief executives downwards, must focus on getting better value for ratepayers" This is Nick speak for drive the price of everything down, which means the wages paid to everyone becomes less. "If they do these jobs well, they can be a turbocharger for New Zealand Incorporated" Everyuthing Nick speaks of comes down to not only the dollar but higher profits from his private enterprise mates. "While the $8b of debt might seem low compared to $100b in council assets, "very little of these assets are income-generating, and fewer still could be cashed up" So it is okay to judge the performance of Local and central Government employees against those of the private enterprise when it comes to cutting staff numbers, but when the performance of the Public area is superior to the provate, it is reasoned away. If it was up to Nick, educating you children, or usinfg the Public Health System will come with a cost to generate a profit, because all he ever raves is private is superior to public. Why then did Donkey set up another government department to oversee the Christchurch rebuild? Councils advertise what they are planning to spend and on what. People comment. The likes of Dan M whinge when they find they are in the minority and what they oppose are actually granted. So much negativity and Nick is the King of that. Typical nelson mail bulsh.
I utterly disagree - ACC is a crock. I have health insurance, travel insurance and am forced to pay money into a rort of an insurance scheme called ACC that I will never get any benefit from.
While ACC does have some uses, it is a blight on many of us who are forced to subsidise it.
Mr Smith need look no further than Hamilton, Christchurch ,Dunedin and Kapiti to see how some dysfunctional local body authorities are and how they operate behind closed doors and make extravagent financial decisions which are funded out of the pockets of ratepayers.
I doubt anything that Nick Smith will do will make the price of rates come down. Rort, Rort, Rort ... Rates are just another tax in disguise. And isn't most of the rates increases due to costs that central government (thats you nick) have passed onto local government?
I suppose that means closing more libaries, pools and parks then Nick?
What a crock..ACC was and is in good financial straits , Smith and his " privatise everything" mates have totally mis represented the state of it so they could 'sell' the privatisation of ACC to Kiwis. Once Insurance companies have their grubby fingers on OUR ACC we can kiss goodbye to what is regarded the world over as the brilliant ' no fault' system that is ACC
Why is the city allowed to compete with its ratepayers? If it provided the essential services and contacted the rest out to its ratepayers, it would save millions. No depreciation, layers of management, directorships to name a few, all work would be contacted on a competitive basis. Where will the resistance come from? Clearly all those with a vested interest in the status quo. Unaccountable bureaucrats, councillors having directorships for which few have the knowledge, skills or talent. Paying people for responsibility rather than performance encourages empire building. All heads of departments should be employed by the council on renewable, reviewable, performance based contract. Incidentally, it is nowhere near as difficult as they would have you believe.
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can mr smith tell me where all the money for upgrading water supplies has gone to? A generous pot of money was set up to help small communities pay for the mandatory upgrading of their supplies, as a result of the revised drinking water standards, as it was realised at the time that these upgrades would be unaffordable to most small communities. many of these small communties will face a targeted water rates rise of several hundred % to pay off the huge loans required to upgrade their water supplies. either that ot the council will be forced to non-comply. This pot of money has been cut, suspended and made more dificult to get out by the national government over the past few years. Everybody drinking from small rural water supplies should thank Mr Smith for the fact that they will either now have no upgrade or have a massive (and i mean massive and 'unsustainable') increase in water rates to comply. It's HIS government that has made one of the key issues facing all councils at the moment a rates rise issue.