Labour plays catch-up with rates inquiry plan

Labour has moved to seize the initiative in the local body rates battle by announcing an independent inquiry into the issue.

Few details of the hastily-arranged inquiry were available yesterday, but its terms of reference are expected to be decided within two or three weeks.

The decision to hold an inquiry shows the importance the issue of soaring rates bills has assumed in political circles.

Prime Minister Helen Clark discussed on Tuesday the possibility of holding a select committee inquiry, only to be overtaken that day by a surprise deal between National and the Greens to start such an inquiry.

After urgent talks with New Zealand First yesterday, Labour went a step further by ordering an independent inquiry into local government rates funding issues.

Local Government Minister Mark Burton yesterday denied Labour had been forced into holding the inquiry.

But he did say that Act leader Rodney Hide's bill to cap rates rises effectively forced a decision.

Mr Hide's bill, which would have limited annual rates rises to the level of inflation plus 2 per cent, was defeated last night when New Zealand First's seven MPs voted against it.

Mr Hide said ratepayers would have been better served by a select committee looking at his bill than by an independent inquiry which might not provide a result.

"I'm going to work hard to make sure the inquiry delivers relief for ratepayers, and that we don't just have an inquiry that goes on forever and never delivers."

A National Party survey of 29 councils this year found an average rates increase of 8.4 per cent - nearly three times the rate of inflation. Auckland region councils have lifted rates for home-owners by between 4.2 per cent and 13.4 per cent.

The outcry against the rises put pressure on all MPs, but New Zealand First in particular has been lobbied hard to vote for Mr Hide's bill to go to a select committee.

The party had been holding out for an independent commission of inquiry into rates, and was yesterday delighted at what it had secured from Labour.

"Only a genuinely independent inquiry, with the scope to explore the depth and breadth of issues at the core of local government rates ... would have the capacity to lead to real change," New Zealand First MP Brian Donnelly said.

"We hope to be remembered for having delivered a meaningful remedy to thismatter."

Helen Clark's office sought to make it clear yesterday that her own rates rise - as reported in yesterday's Herald - had played no role in her handling of the issue.

Reaction to the inquiry announcement was mixed.

Local Government New Zealand president Basil Morrison said he was reassured by the independent nature of the inquiry.

North Shore City Mayor George Wood was "delighted", and said the independent inquiry was a far better option than a select committee inquiry.

But Grey Power, which has put intense pressure on New Zealand First over the issue, was guarded in its response.

"Our concerns are that the inquiry will be exclusive and have no provision for public submissions," national president Graham Stairmand said.

He was worried the inquiry might be "merely a face-saving exercise to convince the oppressed ratepayer that something will be done".

A spokesman for Mr Burton said it was expected there would be a provision for public submissions, but it was not known if they would be written or verbal.

National's local government spokesman John Carter greeted news of the independent inquiry with suspicion.

He said he would press on with an attempt at today's local government and environment select committee meeting to hold an inquiry.

Mr Carter accused the Government of "a transparent exercise in damage control", and of trying to "control the agenda rather than face an embarrassing defeat" at the select committee.

National has four of the nine seats in that committee. The Greens have one, and it will be up to them to decide if a select committee inquiry will be held in addition to the independent inquiry.

The Greens were "cautiously optimistic" about the independent inquiry, but would reserve judgment until they knew the terms of reference and timeframe.