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Local Govt NZ: 12-months rates freeze misguided during COVID-19 pandemic

Local Government New Zealand says the request from the Taxpayers’ Union to implement a 12-month rates freeze is misguided and has the potential to put the brakes on economic recovery following the fall out of the COVID-19 pandemic. 

LGNZ president Dave Cull says focused spending is needed to combat the economic impacts of COVID-19 and councils around New Zealand are reprioritising spending and minimising rates increases.

“We absolutely understand the financial pressure that communities will increasingly face as the economic impact of COVID-19 hits home,” he says.

“A number of councils have already stated that they are changing their rating plans in light of this crisis, and every councils is looking at where they can tighten their belts and what financial tools are at their disposal. This includes deferrals and raising cheap debt to minimise the financial impact of rates on households and businesses - after all borrowing has never been cheaper," Cull explains.

 “We know there is going to be financial pain in our communities. Simply reducing spending would mean adding people to benefit queues while reducing operational capacity at a time when communities want councils at the heart of local emergency responses. 

"As providers of drinking and waste water services, councils are essential lifeline infrastructure providers and in times of crisis such as these our costs may even go up – not down," he adds.

“Secondly, local government is a key infrastructure provider. It should be remembered that 88% of New Zealand’s roading network was part funded by rates. If central government is looking to boost economic activity by lifting infrastructure spending, financial constraints on council balance sheets will severely constrain what projects go ahead.”

Cull says LGNZ is currently working closely with central government and the Society of Local Government Managers on the best set of funding tools and options to help New Zealand get through the crisis.

LGNZ is the peak body representing New Zealand’s 78 local councils, providing a unified voice for local government and a pathway for continuous improvement through CouncilMARK, the sector’s independent assessment and continuous improvement programme.

LGNZ advocates for local democracy, develops local government policy, and promotes best practice and excellence in leadership, governance and service delivery.   

The local government sector plays an important role.  In addition to giving citizens a say in how their communities are run, councils own a broad range of community assets worth more than $120 billion. These include 90 per cent of New Zealand's road network, the bulk of the country's water and waste water networks, and libraries, recreation and community facilities. Council expenditure is approximately $8.5 billion dollars, representing approximately 4% of Gross Domestic Product and 11% of all public expenditure. 

 

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