Local Government Reforms, Is There a Better Way?

Phase one of the government’s much touted local government reforms is now complete, with proposals from several councils (but not all) to amalgamate under consideration with announcements pending. Clearly the horse has bolted from the burning barn!

Manawatū District Council (MDC) having engaged extensively with the community declined to go with the “Head Start” option, indicating to government that it wanted more time to talk with other councils in the Horizons region before deciding next steps.

Largely, MDC provides good value for money, has a good debt record, and having invested in its water assets, is in robust condition. MDC are now working to tease out future options.

There has been very little detail forthcoming from government on what exactly the benefits of amalgamation are for local ratepayers.

Many questions remain on costs vs benefits. Local government have been told to proceed at pace with ratepayers, not government footing the bill. If you were buying or selling a business, due diligence would have been required, but not in this reform.

Do ratepayers realise that the government contributes only 10% of its tax to help implement local government services? Rates pay for shortfalls. This contribution is eroded further by GST being charged on rates. If MDC could retain their GST and tag it to funding roads, water and other infrastructure, it would help reduce reliance on debt and therefore positively impact rates.

Many governments across the world invest far more tax into local government services and expect them to use this investment wisely and with accountability. The new UK government is recognizing that privatisation and amalgamation has not delivered the benefits promised. Work is underway to devolve public services back to local communities.

Now there’s a thought….