Rodney on right track for local government

A very good NZ Herald article:

Local Government Minister Rodney Hide is looking into law changes that could divide council spending between core services, which councils could automatically spend money on, and “extras” – cultural, environmental and social spending and business investments that could require approval from ratepayers.

I like the concept. It empowers ratepayers, while allowing Councils to perform core services without the possibility of inadequate funding.

Mr Hide has not listed all the services he considers core council responsibilities. But he said it would be a wide definition encompassing running libraries, transport and water services and rubbish collection.

Yesterday he listed Hamilton City Council’s investment in the Novotel hotel, Invercargill City Council’s investment in a Lotto franchise and South Taranaki District Council buying the Hawera movie theatre as examples of councils going beyond core functions.

Absolutely. And what Rodney is saying is not that Councils would be banned from doing this, but they have to get ratepayer approval.

Mr Hide said he would like voters to be able to indicate at local body elections how much they would be willing to pay in rate increases over the next three years.

Also a good idea.

Local Government New Zealand governance manager Mike Reid said many councils would not bother with innovative projects if they had to hold a referendum first.

“Invercargill could have held a referendum [on the Lotto shop] but the people on the local community board probably felt they knew what people wanted because they saw them every day in the supermarket,” he said.

If the community board members thinks it is an innovative project based on their supermarket conversations, then they can invest their own money into it – but their role is not to forcibly take money from ratepayers to spend on commercial competitive businesses.

“Any council that exposes itself to too much [financial] risk can be expected to be removed at the next election.”

Mr Reid cited Auckland City as an example of a council that had been changed several times because ratepayers were not happy with spending.

Yes, but by then the spending has occured and is generally not reversible.

Taking decision-making powers away from councillors would stop energetic and entrepreneurial people standing for local bodies, he said.

Councils are not meant to be entreprenuers. You want entrepreneurs when it is their own money they are risking – not everyone else’s. If Council has commercial subsidiaries then entrepreneurs can be appointed to those, but it is ridicolous to think that people get elected to territorial local authorities on the basis of their entrepreneurial activities.

“If it was such a great idea [requiring ratepayer approval] central government might like to apply it to itself, because we’re talking about quite small amounts of money.”

Also not a bad idea. Central Government should not be buying or establishing businesses in competitive sectors.

Gerard Langford, of South Taranaki District Council, said his council bought the Hawera cinema building for $1 million two years ago because the private owners were about to close it.

The community supported keeping the movie theatre, which was run by a trust using money from ticket sales and advertising, he said.

And if the ratepayers gave their approval, they still could.