Sam Broughton: Local Government New Zealand President voices disapproval with proposed rates cap

Local Government New Zealand is warning a proposed rate cap on councils will increase debt costs and place additional burdens on ratepayers.

This comes after S&P Global Ratings released its downgrade of the New Zealand local Government institutional framework score last week - lowering the credit ratings of 18 councils and three council-controlled organisations.

LGNZ President Sam Broughton says capping rates would stop local councils from properly investing in their communities.

"New Zealand's got billions of dollars of infrastructure deficit at the moment because we've kept rates artificially low over generations."

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Councils are starting to freak out a little bit at
the idea of the government's floated of putting a cap
on future rate increases. Forget you're fifteen percent, or you're
twelve percent, or you're eighteen percent. If you're really unlucky,
it'd be more like two or three. It's just a
proposal at the stage. We have no concrete details, but
Local Government New Zealand unhappy. Last week Ratings Agency SMP

(00:23):
downgraded eighteen councils and three CEOs council controlled organizations across
the country. Now ALGAE and Z is saying things could
get worse if you put a cap on our rates.
Sam Broughton is the President of Local Government New Zealand.
He's with me now, Hi, Sam, Yeah, good afternoon. So
what's the problem. What's what don't you like about a
rates cap?

Speaker 2 (00:43):
Well, councils do want to see more affordable rates for
their community, so that's something as a country we definitely
need to address. And one of those ways is to
provide more funding tools for councils. So at the moment
the government really only gives councils one way of paying
for the services that we need to and that's around
collecting rates, a little bit of user charges and then
using debts to fund and a generational infrastructure. But rates

(01:05):
is the only thing. If we could have a share
of the GST on new builds, or use some congestion
charging or rate powers assistant scheme which we're talking to
the government about stuff that the Crown is interested in
the share of Crown mineral royalties, then that would actually
reduce the burden that's on rates at the moment. We
could take a more user pays approach. The thing with
a rates cap is really it's an artificial tool. That

(01:29):
would mean that we wouldn't necessarily be able to invest
in the community infrastructure that we need to. And New
Zealand's got a mess of you know, a billion dollars,
billions of dollars of infrastructure deficit at the moment because
we've kept rates artificially low over duperation.

Speaker 1 (01:43):
See here's the thing. I buy all of your argument
up until you say we could have done this well,
we could also have not wasted a whole bunch of
money on raised site raised crossings.

Speaker 2 (01:55):
Yeah, I think if you look at the million council
spend and I use my counsel. As an example, over
eighty six percent of our capital spends is on transport,
order and wastewater infrastructure.

Speaker 1 (02:07):
You know what exactly, really key exact how many raised crossings?
You know how many cycle ways that no one uses?
This is what the problem that you'll run into when
you're coming out and saying no, I don't want a
rates cap because of X y Z, people will say, well,
maybe if you didn't spend money on dumb stuff, we
would agree with you.

Speaker 2 (02:25):
Yeah, and rates caping is just not the tool what
we're saying, we do want more affordable rates. But we've
seen international examples and Australia is them. South Australia doesn't
have rates capping, Victorian New South Wales do. When you
compare the rates costs for those two communities, what about
on dumb lower?

Speaker 1 (02:43):
What if we cap spending on dumb stuff would help?

Speaker 2 (02:46):
But you know, I think I think that's what councils
do as they think through their transparent way of talking
to communities. We have long term plans. We have people
coming in and talking to us about what they do
and don't want us to spend it. I think you're right.
The transparency council decision making is important, but are camping
doesn't solve that?

Speaker 1 (03:04):
Sam, what do you say to people like Margaret Murray
beinge who was on this program last week Western Bay
of Plenty Council they've pulled out of local government New Zealand.
They say that you're just a left wing propaganda machine.

Speaker 2 (03:19):
Yeah, ah Man, Local government New Zealand has made up
from people from councils all across New Zealanders, a full
mix across political spectrums. And yeah, to say that just
doesn't sort of let's go on to the reality of
what ELG.

Speaker 1 (03:32):
And Z is. Okay, so you wouldn't consider yourself a
left wing propaganda.

Speaker 2 (03:37):
Machine, no way, okay, all right.

Speaker 1 (03:41):
Sam, thanks for your time. Sam Bratton, who's the president
of Algae and Z not a left wing propaganda machine.

Speaker 2 (03:47):
For more from Hither Duplessy Allen Drive, listen live to
news talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio.