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When it’s time to pay the bill

Last week I went to a hearing of the District Licensing Committee.

A local hotel was seeking to renew its license and there had been an objection. Whenever an objection occurs, a hearing must take place.

To a casual observer, this was a South Wairarapa District Council process. It was happening in the Council’s meeting room, and the staff, who were servicing the hearing, were SW Council staff. And, indeed, our ratepayers were footing the bill. Yet the whole process was completely outside of the Council’s control. We do not set the fees that are used to cover the cost of the alcohol licensing regime, and the current fee levels are nowhere near sufficient to cover costs.

This is an example of something Councils are used to, Governments that set the rules and service expectations, and then force Councils and ratepayers to pay the bills.

Recently, however, the Government has surpassed itself by writing a multi-million-dollar cheque that it expects local and regional councils to partly cover. And it made this announcement without any consultation with Local Government.

The background is that in the aftermath of the recent cyclones, the Minister of Finance announced that people living in the most seriously affected areas would be offered a buy-out, similar to what happened in Christchurch’s Red-Zone after the 2011 earthquake. The Minister’s announcement was light on detail, but it did say that “the Government and councils would share costs”.

If Councils are forced to part-fund the Government’s plans, Councils will have two options: To increase rates or to borrow, which eventually increases rates anyway.

Given the extent of the damage to the affected Council’s existing infrastructure, caused by the cyclones, those Councils do not have the funds or borrowing capacity to pay for Minister Robertson’s promises.

Up until now, the Government’s support for cyclone-affected areas and people has been first-rate. But what the Minister of Finance now proposes, threatens to undermine the positive reputation the Government has established. But Local Government is used to this. For a long time, governments have had bright ideas, creating new regulations and rules and then legislating responsibility for funding and administering those bright ideas to local government, without providing the cash needed to implement them.

Not every Council in The Wairarapa, or the Country, will be affected instantly by the Minister’s plans. But, what happens over the next few months may become the precedent that is used for future severe climate events. This will affect many more councils and their ratepayers in the years to come.

In my last column, I drew attention to the Productivity Commission’s calculations showing that Local Government’s share of the country’s income had stayed very steady over many years, while Central Government’s share had grown considerably. In round terms, what this means is that of every $100 paid towards taxation or rates, Central Government gets $90 and Councils get $10. When push comes to shove, Central Government has many creative ways to get extra income. Councils do not.

A recent report on the Future of Local Government, proposed that Central Government should provide significant funding to assist Local Government to meet its obligations. I say “Amen” to that.

Roger Parker
Roger Parker
Roger Parker is the Times-Age news director. In the Venn-diagram of his two great loves, news and sport, sports news is the sweet spot.

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