So our dear old Tory paper here in Wellington gets on the rates bandwagon:
Any business that continuously raised prices by three times the
rate of inflation with no discernible improvement in the quality of the
services it offered would soon find itself bereft of customers and
courting bankruptcy.
The funniest thing is that the rest of the editorial is much more balanced, but the headline and first para are all that many people read.
Community pressure in local bodies is always for more spending: people want another pool, or new sidewalks, or for the water to stop leaking. They want graffiti painted out. They want another festival. They want a new beach. They want fibre to the home networks. They want their street re-sealed. They want flood damage repaired. These mean rates growth, year on year.
Councils also now have to pay for their assets through depreciation. In the long run that will mean much better physical infrastructure in our cities, paid for by current users not just at replacement. In the short run, it means higher rates.
I defy anyone to show me any institution, public or private, of the size of most metropolitan councils, and prove that every job is necessary. I also defy anyone to demonstrate that the growth in Council spending, when not on issues they control (as many of those listed above are), are anything other than responses to things like inflation, tight labour markets, and input costs over which they have no control.
Oh no. It is much easier for newspaper editors to simply bash out some lines to get people going.
I think rates are a silly mechanism for local government finance. I would like to see local income taxes, set at the regional level, providing the bulk of finance for local government. I think people's incomes are a better proxy, in most cases, of their ability to pay for local government services, than are the values of the homes they live in.
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