Local Government Bill progresses

In April the National Farming Review looked at Federated Farmers' calls for local government reform and bringing rates increases back down to earth.

At the time it was uncertain whether the reforms would carry the same emphasis given by then Minister of Local Government, Nick Smith. Thankfully, his successor to the role, David Carter, stayed faithful to Dr Smith's vision of a more focused and efficient local government sector.

Given the impact councils and their costs have on farmers, it is very helpful the Minister for Primary Industries is also the Minister of Local Government. Mr Carter's commitment at Federated Farmers National Conference, that the next step will be local government funding reform, was hugely encouraging.

This is hugely important for farmers. As the Federation has repeatedly pointed out, the land and capital value system of funding local government places an ever-increasing burden on farm businesses, entirely detached from either income levels or benefit from local services. Many farmers pay general rates in excess of $10,000 a year for a business with modest returns.

In the meantime, the Local Government Act Amendment Bill is proceeding through Parliament as the first stage of the reforms. This should be passed by the end of the year.

Federated Farmers is submitting on the Bill and we look forward to our date with the Select Committee.

Two of the Bill's key provisions are the purpose of local government and amalgamations.

Regarding the purpose, the Bill replaces the current Act's purpose statement, which calls for the broad promotion of the "four well-beings" - social, cultural, environmental and economic - with a commitment to "meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in the way most cost-effective for households and businesses".

This is a big improvement on the current purpose statement, especially the inclusion of the words "cost-effective for households and businesses".

In our view, the inclusion of the four well-beings in local government's current "job description" encouraged many councils to be involved in activities outside their "core business".

These range from motor racing and football matches to festivals and flower shows. Also, significantly, it made it harder for councils to say no to demands for increased spending in their core areas.

For example, much ratepayer money has been poured into new or expanded stadiums, aquatic centres, theatres, museums and art galleries. These are all worthy facilities, but are they as critical as roads, water, sewage and rubbish?

Regarding amalgamations, the Government reckons the current Act's provisions are lengthy, complex and the chances of success are low. If passed in its current form, the Bill will make it easier to advance and implement proposals to merge councils.

The Federation has no national position on local government restructuring. Any decision on supporting or opposing proposals are made on a case-by-case basis at a local level, weighing up the pros and cons for farmers. The changes in the Bill may or may not be a good thing depending on individual circumstances.

One worry for some rural people is the risk their small council will be swallowed by a larger neighbour, against their wishes. The Federation agrees this is a risk and is pleased the Bill requires the Local Government Commission to be satisfied there is "significant support" for reform in the smaller council. This provision should help, but whether it makes a meaningful difference will not be known until proposals are advanced and the law tested.

Overall, though, the Federation supports the Bill and we are looking forward to it passing. Then we can get on with the big job of reforming local government funding.