Brian Rudman: Local government inventing new ways to turn the screw

How much longer can local government continue squeezing ratepayers before our pips squeak?

According to a recently released report, the bureaucrats reckon there's a way to go yet. But to extract every last drop, the report advises the development of new ways of doing it.

The joint team of central government/local authority officials have decided that overall "rates levels, and their projected increases, do not place an unsustainable burden on communities in relation to the services and facilities provided". They do concede, almost reluctantly, that "there appears to be a small proportion of local authorities where increasing pressure will be difficult to accommodate using existing funding tools".

The team was set up in 2003 to investigate local authority funding issues after growing rumblings among ratepayers about the rising cost of running local government.

It was, among other things, to look at extra or alternative ways of funding local government.

But for that we'll have to wait until December and a "second phase" report. What has just been released is the phase one, "is there a problem, and if so, what's causing it" stage of the investigation.

According to the boffins - senior analysts and directors from central and local government - things are particularly rosy on the regional front. Which will come as something of a surprise to the politicians voted off the Auckland Regional Council last year after the uproar over rate increases.

"We found very little evidence of affordability problems in the regional sector. Regional rates tend to be relatively low. Many have substantial levels of income from other sources and very little debt." The report concedes that "one or two" regional councils - unnamed - "are facing significant issues in meeting the needs of communities with existing funding tools". It says the issues facing regional councils "are more in the nature of political acceptability of rates increases".

Referring in a footnote to last year's "rate revolt" by some ARC electors, it noted that the the average rate increase was $30 "but appeared much larger when reported in percentage terms".

Almost as an afterthought, it does allude to the ARC drastically lowering business rates, resulting in a one-off and drastic actual increase in residential rates.

So how much has the cost of local government gone up? Between 1996 and 2013, it will rise 74 per cent or 3.3 per cent a year. Between 1993 and 2002, rates nationwide went up 44 per cent. Things haven't slowed down. In the current 2004/5 rating year, local government expects to collect $3.152 billion in rates, a 14 per cent increase over the 2002/3 year.

Unfortunately the variabilities are so huge as to make much of this averaging meaningless - particularly as no individual councils are named or compared.

One of local government's biggest complaints is about the added costs forced on them by having to administer new central government regulations and policy.

The committee investigated this and found "the consideration of costs to local government in policy work and regulatory impact statements is often incomplete, or on occasion is not included at all".

It seems obvious that this glaring shortcoming should be rectified.

On the other hand, central government grants and subsidies to local government increased by 45 per cent between 1999 and last year, while rate income went up 32 per cent and overall operating revenue increased 27 per cent. Most of the Government money was for roading.

Although alternative funding solutions are the subject of the December report, certain areas were canvassed in this report.

One obvious area is the wide range of property - about 4 per cent across the nation - exempt from rates, including schools, hospitals, conservation land, churches and the operational area of ports and airports.

The report also criticises the failure by local government to use the power, gained from the 2002 local government act, to introduce targeted rates to pay for specific projects.

It also proposes more borrowing, rejecting the popular myth that the local government sector is heavily indebted. It says paying for a road or water scheme or stadium that will last 50 years solely from present revenue sources such as rates "effectively means that today's ratepayers and users of the service are paying for the benefits that accrue to future ratepayers" and is "contrary to intergenerational equity".

Don't know about you, but I'm all for a bit of intergenerational equity, particularly if it means no more talk of road tolls.