Oram on the regions

Written By: - Date published: 4:17 pm, July 27th, 2015 - 16 comments
Categories: economy, local government - Tags: , ,

National talks about regional development, but its actions don’t match. Dunedin will not forget the closure of the Hillside Workshops. Northland celebrated decades of neglect by kicking the Nats out and choosing Peters. Rod Oram looks at the way the regions are held back in his Sunday Star Times piece (as posted on Facebook):

NZ towns and cities are stifled by government’s rejection of reform

People around the country have every right to feel they are paying too much in rates. Local government finance is broken because central government and business won’t pay their fair share. Nor will they support reforms. This is a chronic problem for all local communities, whether stagnant or declining as some provincial centres are, or booming as Auckland and Christchurch are.

The issues were laid bare, and good solutions offered, in research presented by Local Government NZ at its annual conference this week. On one hand, government is putting more demands on local councils to do the likes of upgrading wastewater treatment. Similarly citizens often have rising expectations about their communities, which would require investment to fulfil.

But on the other hand, rates cover only 49% of council expenditure across the country. Yet councils have very limited scope to raise rates or find other ways to fund the investment and services their communities want. Worse, the Auditor-General estimates council deprecation charges are meeting barely 80% of the replacement cost of ageing council assets. It forecasts that will fall to 65% by 2022, creating a funding gap of $6-7bn.

In response at the conference, Local Government Minister Paula Bennett told the councils to save money. It was clear the government is dead set against reforms to shift some of the financial burden from ratepayers to other sources of finance.

This system leaves our local communities more dependent on central government funding than any other developed country, as shown by analysis the NZ Initiative, the successor to the Business Roundtable, contributed to LGNZ’s research. …

(Read the full article for plenty more about the situation in Auckland and the increased household rates burden.)

“More dependent on central government funding than any other developed country” plus austerity measures and record government debt is not a recipe for regional development. And that’s not to mention the lack of economic diversification exposed by falling dairy prices…

16 comments on “Oram on the regions”

  1. tc 1

    All created by national so they can grab regional council assets for their mates a la ECAN.

  2. greywarshark 2

    I noticed this statement particularly.
    “More dependent on central government funding than any other developed country” plus austerity measures and record government debt is not a recipe for regional development. And that’s not to mention the lack of economic diversification exposed by falling dairy prices…

    It does seem as if divvying up all the assets we have built up in the last century is their goal, so their books can pass the financial regulator test so gummint can keep borrowing. (Those were the financial regulators still being chirpy to the last minute before the GFC.)

    If central govt is not going to support regions with seed money, regions need to get their own taxes. I suggest having 3% of the GST earned in their own region go back to them.
    It’s what shopping malls do to their tenants, the basic rent has add-ons to it, extra for promotions, and then an extra percentage on growing takings.

    Central govt is preventing regions growing by not supporting basic infrastructure rail, even roads, don’t get a good deal when it’s not Beamer territory. Preventing local taxes makes sure that central pollies can prance around knocking over the queue of local Mayors as if they were dominoes, one push and down they go around the country.

  3. Draco T Bastard 3

    You might think Auckland’s business leaders would be grateful to the Council spending heavily to improve the city and meet the needs of a growing population, and to households for helping to fund it. After all, business is doing very nicely out of both.

    But by and large business organisations are lukewarm at best about the Council’s investment plans. They have far more to say about how the Council should cut costs and sell core assets such as the airport and port.

    Gee, what a surprise – business people wanting to become even bigger bludgers.

  4. greywarshark 4

    I am interested in Scandinavian countries news. I see that getting money for infrastructure where it is needed, and what taxes should be raised for it is a problem there.

    In a frank item in Ice News the heading is – Minister criticised for pooing tourists. This relates to the present Minister for Trade and Industry not ensuring that rises in tourist numbers (as a result of past government efforts!) were matched by needed facilities like toilets. It is encouraging that we all have similar anguish over the good running of our country’s facilities.

  5. Roy 5

    I keep wanting to say Rod is a genius, but he’s not really. He’s just incredibly insightful and honest, and makes it all sound so obvious. I wish he had his hand on the pump.

  6. ropata 6

    I hope the council continues to jack up Auckland rates sky-high, it’s the nearest thing to a decent land value tax we have. Progressive parties should support this as a fairer form of taxation.

    (The drawback is that it won’t help smaller regions at all…)

    • greywarshark 6.1

      @ ropata
      I think you missed putting the /sarc tag at bottom of your first paragraph.

  7. AmaKiwi 7

    I have been astonished that local body leaders don’t openly criticize the elected dictator and his government.

    In many other countries they would not hesitate to. US states and municipalities often vehemently place the blame squarely on Washington. The Scottish National Party didn’t mince words.

    Why so few criticisms of the elected dictator when he alone is responsible for this mess?

    It has been obvious to me for years that this is the dictator’s game: make local bodies do more work with less money so the dictator’s gang have more for their pet projects like charter schools, roads in their own electorates, lower taxes for their rich mates, etc.

    • greywarshark 7.1


    • tc 7.2

      Being openly critical of said dictator results in a swift removal for a more compliant replacement, or they run a dirty campaign against you with their preffered option next chance.

      There is always possible funding deprivation also which is the main tool in keeping pesky local bodies in line.

      Worse case they supershity/ECAN you which acts a warning to all the others to toe the line.

  8. Ad 8

    Councils outside NZ cities don’t criticise the government:

    (A) because they have always been dominated by farmers/National supporters
    (B) because local government has been reduced back to a subsistence level, entirely dependent upon central government.
    (C) because every region south of Taupo (other than Christchurch, Nelson, and Queenstown-Lakes) is stagnant or declining, and have little civic will to fight.

    • tc 8.1

      Paula Southgate has been enjoying her time plundering funds without much accountability after being backed by Nat MP’s into the waikato regional council chair.

      A few folk has been raising the issue but it’s easy to defend when the council is stacked with blueys.

  9. feijoa 9

    The Nat government is quite happy to bully councils into selling assets etc if they need any more money.
    Just ask Lianne Dalziel
    I wonder how many assets Christchurch will have left

  10. Nick Morris 10

    Rather than relocating marginally qualified immigrants to the regions, as we find in the latest National sop,what is needed is to encourage enrepreneurial newcomers who will start businesses in regional areas. This would provide both employment and extra income for the receiving regions. Better to become more viable this way, than by hoping for a greater share of the national cake.
    The big cities will not give up this class of immigrant lightly so the incentives will need to be real.
    Anyone expecting this to happen?

  11. philj 11

    More entrepreneurs like Kim Dot Com throughout the regions you mean …? lol. JK would love that.

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