Sam Broughton: Local Government NZ on the possibility of a rates cap for local governments

The leader of the country's local government association says there's global evidence a rates caps can have detrimental effects. 

The Government's mulling a cap as part of its wider reform to refocus local government. 

Sam Broughton —Mayor of Selwyn District Council and Local Government NZ President— says if core infrastructure like water and transport aren't included in a cap, it can lift a council's borrowing costs. 

He told Mike Hosking Australia is seeing the negatives: New South Wales has a cap, and has seen higher rates increase than those states without one. 

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Episode Transcript

Speaker 1 (00:00):
Shane Jones on the program earlier. It floated the idea
in the speech last week and the Prime Minister on
the show yesterday picked it up and rain with it.
Are we heading for the scrapping of some regional councils,
if not all of them? He also talked of capping rights.

Speaker 2 (00:11):
Of course.

Speaker 1 (00:12):
Now Sam Brought's the President of the Local Government New
Zealand and he is with us. Sam, very good morning
to you.

Speaker 2 (00:16):
Yeah, good morning.

Speaker 1 (00:17):
Make do those thoughts fill you with horror?

Speaker 2 (00:21):
I think we need to think about the system of
local government we've got in New Zealand and take an
approach that's not just about one off announcements of what
a particular minister might think, but what's the future system
of local government and central government that we want to
see in New Zealand. It's been asked before, and I
think it's a good question to ask ourselves.

Speaker 1 (00:37):
Do we have too many councils?

Speaker 2 (00:40):
I think when we look across the board, I don't
think that the system set up in nineteen eighty nine
as currently fit for purpose today. So we can look
across the world. Some places have more councils, some places
have far less, and that's a question that we should
definitely ask ourselves. At the moment, though it seems like
we're going through change based on some ed hock decision making.
So we'll change local government because water has changed, We'll

(01:03):
change local government because roma changes. We'll change local government
because the building consent authorities change, And we cert actually
take a much more strategic approach to this and say
what future system would we like to see if.

Speaker 1 (01:14):
We were going to tackle councils, if we agreed there
are too many of them, is it regional or local
or both you would go at?

Speaker 2 (01:21):
I think it's a system that we should ask that
question about. So in different regions might look different and
there might be different systems that could be set up.
But until we have a proper structured conversation about it,
I think it's too early to say where we should
and shouldn't change things.

Speaker 1 (01:34):
What about capping? Would you be upset at.

Speaker 2 (01:38):
That rates camping?

Speaker 1 (01:40):
Yeah?

Speaker 2 (01:41):
Yeah? Rates keeping? The international evidence shows that it actually
can have a pretty detrimental effect, even in areas where
a government might not intend it to have. So a
rates keeping sort of excludes core infrastructure and water and transport,
even those things get hurt. It can lift councils borrowing costs,
as we've seen in New Zealand already and the examples

(02:02):
in Australia, so that those states that have rates caping,
New South Wales and Victoria actually had higher rates increases
than South Australia where there was no rates cap in place.

Speaker 1 (02:14):
What do you forget your view? Forget the government's view
of the day popular with the public. Do you reckon
if the government came out and said we're going to
get rid of regional councils? Am we going to cap rates?
You take a poll, do you reckon it gets backing?

Speaker 2 (02:25):
I think you know, regional councils have a role to
do and that's around what the public sees as around compliance,
and you know councils that run compliance that can really
annoy people. So I can understand where people might not
enjoy seeing councils and want to take control of councils.
That rhetoric its popular. I think we need to think
about what they see is the effect of the change

(02:46):
we want to implement, and that requires more of a
conversation than just a reaction to something that might channkle.

Speaker 1 (02:52):
Okay, Sam appreciate it. Sam Broughton, who's the local government
New Zealand President.

Speaker 2 (02:56):
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