No competent physician would prescribe a remedy for a symptom before determining its cause.
Local Government Minister Simon Watts wants to cap council rates increases at 2 to 4 percent. Why? Because, ratepayers have been hit with "steep and unexpected" rises that add to cost of living pressure.
That describes a symptom. It is not a diagnosis.
Rate rises, unexpected or not, could be justified. Perhaps councils are finally catching up on the need for greater spending for roads, pipes and water infrastructure.
I calculate that in 2024, adjusted for inflation, local government spending per household on capital formation was higher than in 2018 by $1,227, a 46% rise. Spending on current consumption was up by $767 (19%).
The need for increased council current and capital spending on infrastructure is hardly controversial. Quality is a real concern. There are issues of inadequate accountability, incompetence, poor information, inattention to value for money and disempowered elected representatives.
Minister Watts's press release does not mention such matters. Nor does a cap on additional spending do anything to raise the quality of new or existing spending.
Local democracy is another concern. If ratepayers vote for councillors who support large rate increases why stop them? That some ratepayers object is not a good reason.
Given a diagnosis of inadequate self-management, the physician’s attention can turn to treatment options.
Elected councillors need more power to force management to give them more timely and adequate information. That would improve accountability and ratepayer scrutiny.
A ratepayers' bill of rights that requires a referendum before major capital commitments is an additional option.
Requiring rigorous, timely cost benefit analysis of big projects would inform councillors and ratepayers alike. The Regulatory Standards Act might help here.
Our diagnostician might also detect a spreading disease. A 4% rates cap decrees that increases above about $400 million a year (around $200 per household) are unaffordable. In contrast, the government’s 2026 Budget is for the core tax take this fiscal year to be 6.5% higher than last year. This is an $8 billion rise from $124 billion to $132 billion. That increase represents about $4,000 per household. How can $4,000 be affordable if anything over around $200 is not affordable?
Our physician could be forgiven for adding a taxpayer bill of rights to her prescription for a ratepayer bill of rights.