John MacDonald: Rates caps are a placebo policy

You might recall a poll result that came out back in September which proved that 75 percent of us are idiots.

It’s these idiots that the Government is pandering to with the council rates cap it announced yesterday. And the 75 percent of people who said in that poll that they support the Government forcing rates caps on councils will be very happy today.

Because, from mid-2029, annual increases won’t be allowed to be any higher than 4 percent. Unless a council manages to get a special dispensation.

As a ratepayer, a rates cap sounds like a great idea. But it’s not.

One description I’ve seen of the Government’s move is that it’s lazy politics. Which it is.

Because of the 75 percent of people who support it, as the poll a few months back would suggest.

I suspect the only complaint the pro-rates cap people will have is that it isn’t planned to start for another three-and-a-half years. In mid-2029.

By which time there could very well be a different government in power and, if Labour (for example) is true to its word, then the whole thing could be history.

Labour’s local government spokesperson Tangi Utikere is saying today that they’ll vote against the rates cap law when it goes through Parliament.

He says: “We've made it very clear that we won't expect local government to continue to work and take on additional responsibilities without the funding. So we don't support this rates cap.”

Nelson mayor Nick Smith has been very careful not to bag his old National Party mates. But he does admit that it’s not going to be easy.

Rates caps have been brought-in in Australia and it’s created severe financial difficulties for some councils over there.

What’s more, Christchurch city councillor Sam MacDonald is already talking about the council selling assets to make up for the money it won’t be getting because of the limit on rates increases.

All this is, is another placebo policy. Something that might make us feel better for a little while. But it won’t last long.

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from Newstalk ZB.

Speaker 2 (00:13):
You might recall the pole result that came out back
in September which proved that seventy five percent of us
are idiots or muppets or clowns or bozos, whichever, whichever
would you like? Seventy five percent of us? And it's
these idiots, muppets, bozos, clowns the government is pandering to

(00:36):
with the council rates caps it announced yesterday. And the
seventy five percent of people who said in that pole
that they support the government forcing rates caps on councils.
They'll be delighted, won't they this morning, Because from mid
twenty twenty nine, annual increases won't be allowed to be
any higher than four percent, somewhere between two and four

(00:57):
percent unless the council manages to get some sort of
special dispensation. Now, as a rate payer, I'm a ratepayer.
A rates cap sounds like a brilliant idea, sounds like it,
but in reality it's a daft idea. One description I've
seen this morning of it is that it is lazy politics.

(01:21):
It's also easy politics because of the seventy five percent
of people who support the idea, as shown in the
Pole result a few months back. I suspect the only
complaint the pro rates cap people will have is that
it isn't planned to start for another three and a
half years in mid twenty twenty nine. I'll be wanting

(01:44):
it happening by lunchtime, wuldn't they? And by mid twenty
twenty nine it could very well be a different government
in power, and if Labor for example, is true to
its word, then the whole thing could be history. Labour's
local government spokesperson Tongue Utukei is saying today that they'll
vote against the rates cap law when it goes through parliament.

(02:05):
He says, we've made it very clear that we won't
expect local government to continue to work and take on
additional responsibilities without the funding, so we don't support this
rates cap end of quote. Nelson me and Nick Smith. Now,
he was very careful not to bag his old National
Party mates when he spoke to Mike earlier this morning,
but he did admit it's not going to be easy.

Speaker 3 (02:27):
I think it's going to be a big stretch to
get there by twenty nine hour timetable, and my challenge
to our sector would be, hey, look, don't try and
fight the government, work with them. They are simply reflecting
the frustration from New Zealanders that the sector's costs, which
is not uncommon for a monopoly sector who have not

(02:47):
got under control in the way that households and businesses
have had to change in response to the sort of
post COVID recession.

Speaker 2 (02:53):
So that's Nick Smith. Now, local Government Minster Simon Watt says,
even though it doesn't come into force until mid twenty
twenty nine, the government expects councils to start operating as
if the cap is in place right now.

Speaker 4 (03:04):
We've got a lot of fact in the system them
and we need to make sure that that finite amount
of money ratepayers aren't a bottomless pitt. We know that,
and you know we've got to make sure that that
cash is going into the areas it's needed. We're doing
some other changes around, you know, making sure that councils
are focused on the basics. It's all part of that package.
But I'm confident I'll work with the industry, not against them.

(03:26):
But at the end of the day, you know, I
work for the ratepayer and this is what they've been
calling for.

Speaker 2 (03:30):
But all this is going to do. All it's going
to do is force counsels into more debt. And we
know it, don't we that the more debta council has,
the higher it's costs. And who knows how that would
end if they couldn't increase rates beyond a certain point
or we know they're not going to be able to.
All this is is another one of those placebo policies,
you know, something that might make us feel better for

(03:50):
a little while, But do we really want our local
councils in more debt? Of course we don't. Well, well
I don't you tell me where you stand on it.
Auckland University of Technology Senior lecturer, Doctor Julian Molineux. She
says the idea that councils blow money handover first is
a bit of a fallacy. She says, while there are

(04:10):
some examples of council vanity projects, most of the budgets
are spent on the basics. Basics like infrastructure. Now what's more,
rates caps that have been brought in in Australia and
it has created severe financial difficulties for some councils over
there and We've already got christ Church City Councilor Sam
McDonald's saying this morning that the rights camp is going
to be tricky, and he is already talking about the

(04:32):
council doing things like selling assets to make up for
the money it won't be getting because of the limit
on the rates increases. So I think this is a
very bad move by the government.

Speaker 1 (04:42):
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