Source: Federated Farmers
After rampant rates rises across the country last year, Federated Farmers is calling for the Government to make seven key changes to restore confidence in local decision-making.
“The funding model for our councils is broken,” Sandra Faulkner, Federated Farmers local government spokesperson, says.
“Rage about rates increases will feature strongly when voters have their say in council elections this October, but the Government should also do more to rein in cost pressures.
“Central governments over the years have pointed the finger at council excesses and failings but part of the solution here is to fix faulty legislation and government policy.”
It’s clear that change is needed to turn back the tide on massive rates increases, Faulkner says.
“Fewer people are voting in local body elections, and rates jumped an average 15% this year alone, which has really hurt all Kiwis, including rural families.
“Meanwhile, central government has chipped away at the autonomy of local government with an ever-increasing list of national directions and requirements.”
Two of Federated Farmers’ seven recommendations call on the Government to surrender some of its tax take in favour of councils.
“We say the lion’s share of the cost of repairing and renewing local roads should fall on road users, not property owners,” Faulkner says.
Outside of the state highway network, councils are responsible for maintaining roads and bridges.
On average, councils get 53% of this cost via a NZ Transport Agency/Waka Kotahi Funding Assistance Rate (FAR), paid from fuel taxes and Road User Charges. The rest comes from ratepayers.
“Property value rates are a poor way to fund roads for the same reason as general taxation: it does not tie those who use roads with those who pay for roads,” Faulkner says.
“The system also lacks logic. In areas with a lot of tourism or freight, for example, locals are left paying for roading networks that serve a wider regional or national purpose.”
Because ratepayers baulk at rising road costs, councils feel obliged to scale back renewal and maintenance on roads that are a lifeline for rural families and businesses.
“So, we get deteriorating tarseal, potholes and even road closures in rural areas,” Faulkner says.
Federated Farmers argues the FAR rate should be lifted to an average 90%.
Another change that would reduce council funding pressure is to make Crown land rateable.
Currently, government land is exempt from local authority rates, apart from targeted rates and charges for utilities.
In 2023/24, Auckland Council estimated the Government was exempt from paying a total of $36.5 million in rates that year – worth $506.40 per household.
Federated Farmers also seeks legislation that focuses local government on providing necessary infrastructure, local public services and regulation.
“We want councils to stick to core services,” Faulkner says.
“That requires withdrawal of the controversial ‘four well-beings’ mandate – social, economic, environmental, and cultural – which has led to councils drifting into areas outside their areas of expertise, often duplicating work already handled by central government.”
Faulkner says there’s always debate on where to draw the line on what is a legitimate ‘local public service’.
“There should be room for fostering a sense of community through events such as celebrating Matariki, or investing in social infrastructure such as libraries, halls and swimming pools.
“But there should be restraint on councils from destroying their balance sheets through risky investments beyond their core purpose – things like convention centres and sports stadiums.
“We’re proposing that a referendum must be held before spending is committed on commercial facilities and ventures costing more than $500 per resident.”
New Zealand is at a crossroads with its 78 councils, Faulkner says.
“We can either continue to underfund big challenges on water, transport and housing, or we can look for new ways to restore confidence in a refocused and resourced local government.”
See Federated Farmers’ seven recommendations in its ‘Restoring confidence in local decision-making’ report – Restoring confidence