Recent reports of the Whangarei District Council’s intentions to introduce a substantial increase in rates will no doubt be met with considerable discussion on whether rates should or should not go up and if so by how much. I imagine we all have our own views on this and they will be informed by our own financial circumstances, our value sets and a whole range of other personal circumstances. The unfortunate truth is that these same divergent factors that influence our opinion on this subject contribute to the pressures council face in creating a sustainable funding stream for investing in infrastructure and accommodating growth.
Simply put councils like any business have only two choices in controlling their budget; spend less or earn more. Unfortunately given the incredibly narrow revenue base open to councils under existing funding models and given the political expediency of their governance structures, this has created their current dilemma. For years councils have set low rates and have then not set a spending plan that aligns with those rates. Some commentators have described this as a self-inflicted wound that is result of setting a totally unrealistic target that can only be met by unacceptable cuts in service.
If we want a city – and a region – where people want to live then there needs to be investment that will attract people to live here, businesses to operate here and tourists to visit here. Rate rises have always been unpopular and given the low level of engagement in local body elections, the skewed demographics of those who do engage and the lack of any depth of rigorous debate that generally takes place; then campaigning for zero rates increases is always going to be an easy road to go down. This does not however allow for investment for growth and infrastructure.
I hope that as people engage in this discussion that they focus on asking the right questions rather than on what the proposed answer is. It may well be that rates are in fact too low, after all many property owners would spend more on power than they do on rates and all the services that those rates provide. I think the two questions are what should councils do and where should they get their money to do this from. Even if I had the right answer to these questions it would take more than the column space available here to do so but I am certain that in the future the existing funding model will be considered neither right nor equitable. More importantly in its current form it is unlikely to be sustainable.