The Central Otago Mirror
Wednesday, 27 March 2013
Why local rates exceed inflation - and why that's good for ratepayers
Every year, and every time local authorities spend money that someone objects to, the call goes out to keep rate increases below inflation. Lots of people, including some national politicians, seem to think this is a good idea.
It would be, if the real costs of supplying services only increased at the cost of inflation. But they dontt. Inflation is one of many drivers of cost increases. A construction index would be better, but would also under-estimate the real costs of council-supplied public goods.
Matching rate increases to inflation would cause a real decrease in council spending power, and a much steeper decrease in the availability and quality of the services that ensure community success.
Because councils have little choice about most of their big-ticket spending, cuts would be especially deep in the few remaining areas - libraries, parks, sports grounds, rubbish removal, for example. Our towns would quickly become dirty, mean, dispirited places. Those who could would leave. As in rate-capped communities in the USA and Europe, crime would rise and property values would plummet.
For the additional cost of a few cups of coffee each month, I'm in favour of funding success and security and safety - and paying what it really costs to deliver those benefits.
And another thing: a council that keeps its rates low by putting things off - especially in an election year - is only storing up expensive trouble for the future. This is an election year.
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