May 24, 2010

Getting to the core of local government reform

I have just read the Business NZ submission on the Local Government Act 2002 Amendment Bill.  It contains an array of innovative thinking some of which I agree with others which I think will advance no further than the Select Committee filing cabinet.  The submission does make some important points in regard to the prevalent pattern among local councils to increase rates by significantly more than the inflation rate.  While there may be some times when such increases are justified - they should not be the norm. The consistency of such increases in recent years points to a problem with operational expenditure control by councils. 

The submission suggests that local authorities' core business should be funding and - in justifiable circumstances -  the provision of local public goods that cannot better be provided by firms, households and non-profit organisations, plus the administration of appropriate regulations. While I would be reluctant to treat such a proposal as requiring overly religious adherence it may be a useful place to start in commencing a thorough review of local government expenditures. The case for funding activities beyond the core than then be made on its merits under the watchful eye of ratepayers and their watchdogs - an informed media and blogosphere.

The submission also calls into question the potential for duplication and ill-informed decisions when local government attempts to enact redistributive policies on top of similar policies enacted by central government.  Clearly with all the data held by IRD and WINZ central government has access to more comprehensive data on incomes and wealth distribution throughout NZ.  While all levels of government should deal with citizens justly perhaps there is a case for ensuring that well-intentioned policies at local government level are actually achieving the outcomes they were intended to deliver.

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