Dunne Peter: General Debate 
Dunne Peter: General Debate 
[Volume:634;Page:5438] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 For many New Zealanders listening to the debate this afternoon what they have heard will be of little relevance to them because for many New Zealanders at the moment in all walks of life one of the most pressing issues they face is paying the rates bill. As property values have escalated and as council services have increased the pressure on domestic rates as a way of financing those operations has also increased to the point where it has become intolerable for many. The decisions that were announced a few weeks ago about an inquiry into the rating system will go some way towards addressing these matters but they are in effect dealing with the symptom rather than the problem. I want to spend my time this afternoon concentrating on what the problem is and on some of the solutions to it. 
We have 4 million people in New Zealand; we have 12 regional councils and 74 territorial authorities including 16 city councils. Local authorities in New Zealand contribute about 3 percent of the GDP of this country. When one looks at the number of councillors who are elected and at the roles they perform it can be seen that we are hopelessly over-governed at a local level. In my area of Wellington we have one member of Parliament for every 54000 people and we have one local council or district health board member for every 5400 people. The real issue as to why rates are increasing is that the cost of local government in New Zealand is increasing and the charges that local government imposes are increasing—and that is the issue we ought to be targeting. 
It is worth noting that 57 percent of the $4.6 billion it costs to run local government in New Zealand comes from rates. Twelve percent comes from central government 20 percent comes from other sources and there are other bits and pieces as well. Until we tackle that issue we will always have a problem with escalating local body rates. One of the things we need to do is go back to the process that was begun in 1989 of local authority amalgamation and reformation to ensure that we have structures that meet the needs of our people today and that do not impose significant additional costs upon them. 
The issue of rates financing local government has been a significant one worldwide. The Irish in 1977 abolished rates altogether and took to financing local government out of significantly increased motor vehicle registration charges. That did not work and they are now reverting to a system of some limited rates application. Britain tried a poll tax in the late 1980s. All that did was to bring down the Conservative Prime Minister and Government of the day and cause rioting in the streets. 
There is no simple answer to the financing of local government. Australia is trying various state taxes and levies. The real issue is the purpose and function of local government itself and for a country of our size it is a big question to be asking as to whether we need the level of local government we have—whether we need the relationship between regional authorities and territorial authorities with their plethora of duplication of administration. We need to ask whether we continue with the system whereby some services are provided by some councils while in other places they are provided by central government where every single council seems to have to have a tourist promotion initiative or an economic development initiative and where we have constant repetition and argument between parochial local authorities that stifle development stifle growth and stifle opportunity. 
I think that if we got back to basics and looked again at the structure and purpose of local government and our expectations of that then structured the system accordingly and if we then worked out the best way of financing those operations we could make significant changes for the benefit of the rates bills many New Zealanders are now facing. It is simply not good enough to continue with the high level of over-government we have at a local authority level. By all means we should look at things like community boards and other forms of direct representation for specific communities but we have to get away from the monolithic structure of local government in New Zealand that is stifling so many areas of development today.