Careful what you wish for, warns an Australian mayor, as a proposed rates cap system in New Zealand could lead to reduced services, delayed infrastructure repairs, and outdated sports facilities. The mayor of the Northern Beaches Council in New South Wales, Sue Heins, shared her concerns at a Local Government New Zealand meeting in Wellington. Heins highlighted the challenges faced by councils with rates capping, which has been in place in New South Wales for 40 years. She explained how these councils struggle to raise sufficient funds to maintain services and repair aging infrastructure, especially during rapid cost increases. This situation has led to difficult decisions, such as choosing between fixing a collapsing seawall or addressing a safety issue in a community center due to failed lighting. The mayor emphasized the dire straits councils find themselves in when their ability to raise funds is limited. North Sydney, for instance, is currently facing these challenges. To address extra funding needs, councils must apply for an SRV (special rate variation), a process that takes approximately three years. The proposed rates cap policy in New Zealand aims to control local authority rate rises, often tied to inflation. However, it has sparked concerns among local authorities, who must balance the need to fix aging infrastructure with keeping rate increases affordable. Double-digit percentage rate increases are common, and ratepayers are already facing significant increases during a cost-of-living crisis. Minister Simon Watts acknowledges the issue, stating that ratepayers cannot afford continuous rate increases above inflation and population growth. The government has been studying rates capping systems in other jurisdictions, including New South Wales, to understand their experiences and find successful strategies. A rates cap system for New Zealand, according to Watts, should ensure councils can fund core infrastructure without hindering housing growth. However, mayors in Wellington and Wairarapa, including Andrew Little and Fran Wilde, have raised concerns about the proposed policy. They argue that a rates cap could undermine accountability to residents and ratepayers, as mayors and councillors must make financial decisions reflecting the community's needs and aspirations. Wilde, a former Wellington mayor, suggests a nuanced approach rather than a strict rates cap, advocating for revenue sharing with local government. Masterton District Council Mayor Bex Johnson agrees that rising rates impact the community and household budgets. She emphasizes the need for additional funding mechanisms if a rates cap is imposed to avoid deferring essential infrastructure work. Carterton Mayor Steve Cretney expresses caution, preferring to wait and see the specific details of the rates cap system. The New South Wales Government's report on local government funding for infrastructure and services recommends redesigning the local government rating system, indicating ongoing discussions and potential reforms.
