The Local Government Business Forum has today released a report calling for binding referendums on major council spending projects, giving ratepayers a way of saying yes to projects that they support.
“Council rates increased an average of 12% last year and are estimated to rise another 9% this year. It is little wonder there have been loud calls for the government to step in and cap rates increases,” said the Local Government Business Forum’s secretary, and report author, Nick Clark.
The Forum’s report Local Government Spending Referendums recommends requiring councils to hold binding referendums for significant capital projects exceeding $500 per ratepayer or 5% of annual operating expenditure.
I absolutely support this. Wellington has around 75,000 ratepayers so this means any project over around $40 million would go to referendum. I can guarantee you many of these daft projects would have been killed off. Ratepayers would never vote for a recycling scheme that reduces greenhouse gas emissions at the cost of $19,000 a tonne (the ETS price is $57) as they pay the bills. But Councillors did.
“International experience shows that rates caps can cause problems, including underinvestment in critical infrastructure,” Clark continued.
“Ratepayers deserve a direct say in major spending decisions on non-essential projects. Our proposal offers a democratic ‘third way’ between uncontrolled local government spending and centralised rate capping,” added Dr Eric Crampton, Local Government Business Forum spokesperson.
I think you do both. You cap rates generally to inflation, but you hold binding referendum on major projects, which if approved can breach the rates cap.
David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders
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