Of rates, rubbish, rats…and RoNS
People reserve a special hatred for local government rates – probably because they come in the mail as a bill. It was a given then that the National government’s ‘Better Local Government’ reforms aimed at putting the brakes on rates increases were roundly applauded by Joe Public back in March. National’s narrative at the time was perfect. Rates increases greater than the rate of inflation suggested that local government had overreached itself. Too much was being spent on non-core activities like arts, culture, sport and events at the expense of the long-suffering ratepayer. Time for local government to bring rates down by refocussing on its core functions, like providing local infrastructure. Horror stories like the debt incurred by Hamilton ratepayers on the ill-fated V8 Supercar event helped sell the story. “About bloody time”, ratepayers across the country said.
A deeper look though and this narrative doesn’t hold up. Local Government New Zealand data dug up back in March by Green MP Eugene Sage shows us that Council spending on non-core services in fact declined by $185 million between 2008 and 2010. Non-core services make up just 13.2 per cent of local government spending across the country. Such figures fly in the face of National’s sound-bites about needing to pare back local government to its core functions. It is clear that Council rates are increasing despite a reduction in non-core spending. It begs the question – what is really driving the rates increases? Aside from one-off horror stories like the Hamilton V8s, it aint the non-core spending that’s the problem.
In reality, the government’s Roads of National Significance (RoNS) have the most to do with rates increases. It might seem like drawing a long bow, but let me explain. Transport projects are generally the most expensive part of a Council’s budget. Local roads are paid for through a combination of Council rates and the National Land Transport Fund (NLTF) – petrol taxes, road user charges collected by central government. The RoNS are a $14 billion set of seven mega motorways which between them account for 75 per cent of transport spending through the NLTF. The vast amount of spending on the RoNS means that funding for every other type of transport project is squeezed – the New Zealand Transport Agency acknowledge this (see update below). For local roads, this means that Councils increasingly have to pick up the tab, as too much of central government’s funding is gobbled up by the RoNS. A case in point: Auckland Council had to bail out NZTA to the tune of $100 million last year due to a local road funding shortfall.
Now… guess what that means for your rates bill?
Thus, contrary to popular belief, it’s National’s failure to hold up its end of the deal with local road funding that has the most to do with recent rates rises. Just exposes the RoNS for what they are really – an all-in bet on yesterday’s solution to congestion that is funded to the detriment of everything else. Also exposes the ‘Better Local Government’ reforms as an ideologically driven “solution” to a problem caused by central government’s inability to keep a balanced transport budget. It’s a solution to a problem…in the same way that education cuts are a “solution” to the revenue shortage caused by tax cuts for the wealthy.
All very hypocritical, and more than a touch ironic for National to lecture local government on fiscal responsibility when it’s $14 billion spend on roads to nowhere are the problem in the first place. Do as we say, not as we do. It would be funny if weren’t so batshit crazy…
*UPDATE* – The latest NZTA report on the RoNS has this to say:
“The impact of the size of the RoNS projects in the overall programme, and the investment level variation on our ability to deliver has become evident over the last 3 years. A programme with fewer, larger projects becomes increasingly influenced by funding availability, and this can lead to the management of fluctuations being dealt with through re-timing of smaller activities. The RoNS projects are now the majority of the programme, with an average of 65% of projected annual state highways capital expenditure over the next 10 years being invested in the RoNS with a maximum of 80% in 2012-13.”
So there you go…even NZTA know that they can’t afford the RoNS without cutting back on the rest of their responsibilities. And still no proof of the RoNS economic benefits. The only people making any sensible noises about this are Phil Twyford and Julie-Anne Genter. They seem to be the only people in parliament that understand that balanced transport spending at central government level will help keep rates down, and provide the transport choices that everybody – even the truckies – stand to benefit from.