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Rates 'not affordable in 10 years'
Rising rates will be unaffordable for homeowners in just 10 years, the head of a nationwide inquiry into council spending warns.
The independent inquiry will warn councils to cut spending when it reports to the Government at the end of the month.
It is unclear what action the Government will take on the inquiry's recommendations, or if there will be resulting impact on taxes.
Councils have been calling for government help to meet skyrocketing bills for some time.
Inquiry chairman David Shand said yesterday that rising infrastructure costs were pushing rates to unsustainable levels.
"It has got to the stage where looking 10 years ahead, rates will not be affordable to a fair number of people. The basic point is that rates will not be sustainable on the current basis," Shand said.
"We will be saying that local government has to exercise constraint in their expenditure. We will recommend various ways to approach it, but we certainly will not be saying things like Dunedin should not build a stadium."
The warning comes as councils across the country have increased rates to levels much higher than the 2 per cent level of inflation.
The Christchurch City Council last month raised rates by 7.35 per cent on average, and some districts have had double-digit rises to fund large infrastructure projects.
Westport raised its rates by 23 per cent to fund a sewage-treatment plant.
Shand said rising infrastructure costs were driving rates increases across the country, and the inquiry was considering whether the Government could help fund expensive water projects.
"A lot of it is driven by huge infrastructure costs, but infrastructure does not need to be gold-plated," he said.
"We will look at whether there should be more infrastructure funding coming from central government in the water area. There is a lot of roading funding, but not much in other areas."
He would not reveal his main recommendations before reporting to the Government, but said the inquiry could recommend a complete rethink of the rates system.
"Is the system so broke that we need to replace rates? It is an issue we have looked at," he said.
The inquiry was commissioned by Minister of Local Government Mark Burton last November to address public concerns over rates rises.
Shand's claim that rising rates were unsustainable was greeted with universal acceptance. The suggestion the Government could help fund water infrastructure to relieve rates pressure was also welcomed.
Westport Mayor Martin Sawyers said: "Rates are unsustainable, if they keep rising at this level. We would like to see central government put more money into water projects.
"Sewage treatment is clearly linked to health issues and protecting the clean and green national identity, so we should see money from central government."
Local Government New Zealand governance manager Mike Reid said government subsidies for water infrastructure would restrain rising rates.
"To get infrastructure right does require some national assistance," he said.
"We would like a top-up mechanism for infrastructure funding."
Pressure groups and residents' associations said rates rises left elderly residents and rural ratepayers vulnerable.
Christchurch Combined Residents' Association chairman Ralph Ross said rising rates put impoverished people in jeopardy.
"There are people on the financial red line who need to be considered in this whole thing. People at the bottom of the stack find themselves with an ever-increasing problem," he said.
City council funds and financial policy manager Geoff Barnes said the average rates bill of $24 a week was affordable and about the same price as a "family meal at McDonald's".
"When you consider what rates pay for – the best water in the world, effective sewerage systems, parks, roads and art galleries – it is a lot for $24 a week," he said.
Rising rates will be unaffordable for homeowners in just 10 years, the head of a nationwide inquiry into council spending warns.
The independent inquiry will warn councils to cut spending when it reports to the Government at the end of the month.
It is unclear what action the Government will take on the inquiry's recommendations, or if there will be resulting impact on taxes.
Councils have been calling for government help to meet skyrocketing bills for some time.
Inquiry chairman David Shand said yesterday that rising infrastructure costs were pushing rates to unsustainable levels.
"It has got to the stage where looking 10 years ahead, rates will not be affordable to a fair number of people. The basic point is that rates will not be sustainable on the current basis," Shand said.
"We will be saying that local government has to exercise constraint in their expenditure. We will recommend various ways to approach it, but we certainly will not be saying things like Dunedin should not build a stadium."
The warning comes as councils across the country have increased rates to levels much higher than the 2 per cent level of inflation.
The Christchurch City Council last month raised rates by 7.35 per cent on average, and some districts have had double-digit rises to fund large infrastructure projects.
Westport raised its rates by 23 per cent to fund a sewage-treatment plant.
Shand said rising infrastructure costs were driving rates increases across the country, and the inquiry was considering whether the Government could help fund expensive water projects.
"A lot of it is driven by huge infrastructure costs, but infrastructure does not need to be gold-plated," he said.
"We will look at whether there should be more infrastructure funding coming from central government in the water area. There is a lot of roading funding, but not much in other areas."
He would not reveal his main recommendations before reporting to the Government, but said the inquiry could recommend a complete rethink of the rates system.
"Is the system so broke that we need to replace rates? It is an issue we have looked at," he said.
The inquiry was commissioned by Minister of Local Government Mark Burton last November to address public concerns over rates rises.
Shand's claim that rising rates were unsustainable was greeted with universal acceptance. The suggestion the Government could help fund water infrastructure to relieve rates pressure was also welcomed.
Westport Mayor Martin Sawyers said: "Rates are unsustainable, if they keep rising at this level. We would like to see central government put more money into water projects.
"Sewage treatment is clearly linked to health issues and protecting the clean and green national identity, so we should see money from central government."
Local Government New Zealand governance manager Mike Reid said government subsidies for water infrastructure would restrain rising rates.
"To get infrastructure right does require some national assistance," he said.
"We would like a top-up mechanism for infrastructure funding."
Pressure groups and residents' associations said rates rises left elderly residents and rural ratepayers vulnerable.
Christchurch Combined Residents' Association chairman Ralph Ross said rising rates put impoverished people in jeopardy.
"There are people on the financial red line who need to be considered in this whole thing. People at the bottom of the stack find themselves with an ever-increasing problem," he said.
City council funds and financial policy manager Geoff Barnes said the average rates bill of $24 a week was affordable and about the same price as a "family meal at McDonald's".
"When you consider what rates pay for – the best water in the world, effective sewerage systems, parks, roads and art galleries – it is a lot for $24 a week," he said.
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