Wednesday, 18th July, 2018

Source: Federated Farmers


The independent and thorough scrutiny the Productivity Commission should bring to bear on local government costs and funding could be the circuit-breaker ratepayers are looking for, Federated Farmers President Katie Milne says.

"We’ve been down the track of inquiries looking into why local government costs significantly out-pace inflation, and alternatives to rates as the main council funding mechanism, before. What we’ll need this time is willingness by politicians to act on the solutions that are recommended," Katie says.

"Nevertheless, farmers appreciate that the Coalition Government has set the Productivity Commission onto a wide-ranging investigation of the drivers of local government cost pressures, the limitations and equity of current funding and financing models, and affordability now and into the future."

Many councils derive over 70% of their income from rates on property. Farm rates continue to rise apace and, given the relatively high investment in valuable land required to operate a viable farming business, are among the highest overheads farmers have to shoulder. This despite the increasing costs often having little direct relationship to the level of services delivered or used.

"The watering down of councils’ legislative mandate with the proposed return of the so-called ‘four well-beings’ clauses could encourage councils to stray even further from core activities such as roads, sewerage, stormwater and rubbish collection," Katie says.

To be fair to local authorities, the other aspect of this is the ever-increasing list of expectations and functions requested or required by central government or residents. For example there are plenty of new investigation, monitoring, regulation, infrastructure and reporting requirements around water, biodiversity and other environmental topics.

"They’re often completely unachievable for many smaller councils, or councils like Southland District with a massive geographic area and small ratepayer base. These sorts of things must have extra central government funding or cost-sharing."

Another example is the cost of maintenance on back-country roads, which may be heavily used for freight purposes or by tourists, but which are currently paid for by the local council, which in turn puts a large part of the cost on farmers.