Source: Radio New Zealand
Palmerston North Mayor Grant Smith. LDR
A local council representative has called for “balance”, as the government contemplates a cap on unsustainable rates increases.
The legislation, which would restrict the increases to 2-4 percent each year, was proposed for early 2027, with a two-year transition period, but international credit ratings agency S&P warned the limit would squeeze councils already struggling to make ends meet.
Only five of 78 councils have delivered a rates increase below four percent for the 2025/26 year.
Local Government NZ board member and Palmerston North Mayor Grant Smith told Checkpoint some local bodies could show more “discipline” in their spending and could also be smarter about how they carried out their business.
“I can understand why it’s happening for some communities that have had real high increases over a number of years,” he said.
“I can understand totally where the concept is coming from and the discipline isn’t really a bad thing. We share some of those ideas, but it’s got to be balanced.
“We’ve seen what’s gone on in Australia, where there has been a very hard line and when things start breaking, you get a massive, massive bill.”
Smith suggested one necessary change to the proposed legislation was how the rates band was decided.
“It’s measured off CPI [Consumer Price Index], but councils don’t buy groceries or even a lot of petrol,” he said.
“We buy infrastructure, we buy buildings, we build roads and we purchase pipes, and that’s all quite differently indexed.
“Pipe manufacturers and construction and bridge builders all don’t work off CPI – they work off the open market and, consequently, we’ve been dealt to over a number of years.”
Smith suggested councils could look at other ways to cut their costs, including the assets they owned and operated in the community.
“We’ve always done things traditionally,” he said. “We’ve always owned things as councils, but possibly we can lease things.
“We all own museums, we own convention centres – do we really need to own them? We could lease them.
“Libraries and some chambers and some community centres are not things you would do that to, but there are different ways of dealing with it.
“We’ve just to think differently – it’s all small stuff and low-hanging fruit, but it makes a difference.”
While many were critical of exorbitant local government salaries, Smith denied staff were overpaid for their skills.
“Every council and every staffing situation will be different, and I think we are putting a very simplistic view that council people just turn up and do very mundane work,” he said.
“Some of them do incredibly complex work, whether it’s a chief planner in a very big council making billion-dollar decisions for their organisation – you can’t pay those people peanuts.
“I think it’s horses for course and I think there is a bit of simplistic talk about wages and what people are worth.
“Do we need to be a bit smarter about how we recruit and that sort of thing? Yes, I think there is an element of that, but again, balance has to come into the discussion.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
