Friday 23 March 2012

Dr Smith's Discredited Prescription

Predestination? Dr Nick Smith's swansong as Minister of Local Government was a reheated version of the now thoroughly discreditied "Taxpayers' Bill of Rights" (TABOR). By limiting rate rises to the rate of inflation and/or population growth, Smith's legacy will be an increasingly underfunded local government sector. If you want to know what it feels like to be slowly crushed by a sinking-lid budget - just ask the people of Colorado.

IT’S DEPRESSING. Dr Nick Smith always struck me as a reasonable sort of bloke. There were plenty of flinty-faced ideologues in the National Party: politicians impervious to all but their own opinions; unmoveable by evidence, reason, or even (in many cases) by old-fashioned common-sense. But, up until this Monday, I wouldn’t have included Dr Smith among them.

But his swansong leaves us no choice. The departed Minister’s “reforms” of New Zealand local government are driven by pure ideology: ideas already discredited in their country of origin, the United States. The destructive effects of artificially constrained budgets are readily observable in the crumbling infrastructure and moral squalor of the American communities forced to adopt them.

New Zealanders need to understand that if National and its support parties are permitted to introduce this far-right American ideological virus into this country, then our own communities will suffer a similar fate.

Our regional, city and district councils will, when it comes to revenue-gathering, be required to operate what amounts to an unending “sinking-lid” policy. In a surprisingly short period of time, the funds available for public amenities like libraries, art galleries, theatres, swimming-baths and parks will dwindle to the point where all of these public services find themselves struggling to survive. Initially, they will resort to user-charges, but if the experience of the US State of Colorado is anything to go by, such measures will provide only temporary relief. Sooner, rather than later, they will be forced to close.

Local infrastructure will fare little better. Denied the right to raise local taxes (i.e. “rates”) above the level of inflation and/or population growth, our local councils will be unable to embark on the long overdue refurbishment of this country’s water reticulation and sewage systems. The maintenance of roads and footpaths will similarly be allowed to slide. Kerbing and channelling will crumble and our streets will be full of pot-holes. Complaints will be answered with an occasional shovel-full of gravel.

In just a few years our town or city will take on a dishevelled, even decrepit, appearance. Laid-off council workers will drift away. Go-getting entrepreneurs will seek greener pastures. Young people will not return from their studies in wealthier, more exciting places. Our local authority’s rating-base will shrink. With even less money to spend, its ability to maintain services and repair infrastructure will be even further compromised. Our communities’ slide into decrepitude, and the exodus of their populations, will gather pace.

Of course, not everybody will be unhappy at this turn of events. Those lucky enough to own their own homes; those with a healthy investment income; those whose children long ago departed the family home; those who, for a very long time, have regarded the vast majority of their fellow citizens as shirkers and wastrels: these folk will be delighted. They never used the library. They never visited the art gallery or the theatre. Their own private gardens were always preferable to the city’s parks. If they wanted a swim they dived into their own private pool.

In Colorado, from whence National and ACT filched this model of local government, it got to the point where small towns were forced to lay-off a good portion of their fire department and sack most of the Sheriff’s deputies. In some places the authorities went as far as turning-off every other street light. Anything to relieve the relentless pressure on their budgets.

Why is the National-led Government embracing this social, economic and cultural disaster? Why has it refused to be persuaded by, for example, the Productivity Commission’s draft report on housing affordability, which, according to the Greens’ Eugenie Sage, shows that: “rates have been declining in relation to property values, indicating that in terms of household wealth, rates are becoming less significant”.

The answer, like the problem, is contained in the Far-Right’s hatred of collectivism. The city, the civis, remains the fount of civi-lisation. By their very nature, cities are both an exercise, and an experience, in collective living. Consider Christchurch: what was the Canterbury community’s first and most striking endeavour? Their Cathedral.

Would such a structure, constructed at such a cost, and dedicated to such a purpose, be permitted under the Government’s proposed new regime? Of course it wouldn’t.

The Far Right’s intention is to replace the collective infrastructure of “We”, with the private architecture of “I”.

This essay was originally published in The Otago Daily Times, The Waikato Times, The Taranaki Daily News, The Timaru Herald and The Greymouth Star of Friday, 23 March 2012.


Pete said...

There was a great episode of This American Life about the experience in the US with this kind of approach to public funding and taxes a couple of weeks ago. Check out the episode at

Robert Miles said...

While not a fan of Nick Smith, I largely agree with the Trotter views of the undesirablity of the Smith/California perscription for a local govt sinking lid.
The real issue is what has gone wrong with local government in say Hamilton the most glaring example-but a treand also evident in the Dunedin stadium, rugby subsidy and possibly a lot of Christchurch council outrageous expenditure on real estate in CBD real estate, supposedly to put in another extravagant bus terminal.
In Hamilton its only about the 2002 local govt reforms- the real problem is the emptying out of professional and business talent from all the provincial cities from the Hamiltons and Taurangas with 180,ooo population to the smaller Timaru and Invercargills. Even in Timaru and Invercargill in the mid and late 1980s thousands of professional mangagers, highly qualified insurance and bank workers, government managers with good degrees exited with computerisation and rogernomics and the trend intensified in the 90s. In the 1970s provincial boys and girls high schools would have a dozen teachers with first class honours and or masters. Early in the 21C most such schools would only have a couple of teachers with more than a mediocre batchelors degree. Likewise the recruitment of new pakeha NZ trained doctors and specialists into those cities largely stopped in the mid l980s.
Obviously in Hamilton in the business world there a still a number of business operators of high intelligence, but a fraction of what used to be- and most of the remaining professional and university class have retreated form public and community life, withdrawn to lifestyle towns like Cambridge and Havelock North (cf napier and hastings). Also the huge expansion of Hamilton and Tauranga in the 1970s means it dosent have the same comparative base of professional legal, medical and teaching families that have been the core of service in the provincial south island and lower north island cities since the start of the 20c.

Anonymous said...

I’m a resident of Hamilton and I support the reforms. As Mr Miles points out, there is a dearth of worthy candidates in local politics, especially in Hamilton (although other places I have lived have been much the same). We’re stuck between a rock and a hard place. Either we allow the inevitable bunch of third rate wannabes to sink the city further into debt with their pet projects, or we accept that the cost of preventing them from doing further damage is a curtailing of their powers. The latter is necessary as the Hamilton City council has committed to building a velodrome that isn’t even in Hamilton, that will serve a very small fraction of the community at a very high cost, and which is essentially a way of buffing the profits of the private school beside it. Yet the voters continue to elect the same sort of people to council every time (that is the small proportion of the population who actually vote). The average Hamilton councillor consists of an intellect the size of a pea floating in an ego the size of a zeppelin.
Central government also has its share of bozos, but the worst ones tend to get weeded out or marginalized (Nick Smith for all his faults was not an idiot). The primary function of any reasonable politics should be to restrict the dumb and deluded from ever exercising political power. This is necessarily prior to any considerations of policy. The cost of doing that has increased with inflation to now include closing libraries and suchlike. C’est la vie.

Anonymous said...

Why is it that the left insist that tax and more tax is "good for us". The point is that the local bodies have been spending way ahead of inflation for years,just look at the salaries they pay themselves on the pretext of "market value" when unlike the private market they dont have to generate any income, just tax and spend,its got to be capped somewhere or we will simply all go broke!

Chris Trotter said...

To Anonymous@3:24

Please listen to Peter McKinlay from AUT in this clip from Jim Mora's show.

In it he puts paid to all those silly myths about local government spending.

It's amazing what a bit of reality-based reasoning can achieve!

Anonymous said...

" when unlike the private market they dont have to generate any income,"

People don't generate income. They swap goods and services. The council removes your trash and you pay them with money you earn swapping your stuff with other people. The only difference is that you don't get to choose who hauls away your trash, because it is cheaper to have a monopoly in this case.

The problem with councils is not that they fail to provide useful services, but that they are a bunch of baboons who waste additonal money on services we don't need or want.

Michael Herman said...

It comes as no surprise the reforms introduced under Reagan, Thatcher, Lange and others resulted in the people with power, influence and money paying lower taxes and the infrastructure belonging to all the people declining to a point of being largely sub-standard.

Anonymous circa March 23, 2012 3:24 PM appears to think that approaching a real rate of investment in maintaining public assets is a crime yet fails to recognise that if the rich and super rich were to be taxed at the rates considered feasible and moral before unfettered greed was unleashed like a plague of locusts in the 1980s, we'd-almost-all be better off.

Low taxes for the rich and a deregulated economy - yeah, looks like that's worked really well.

guerilla surgeon said...

Actually most local bodies have been prudent as Chris said. The main problem it seems to me is that central gov. has transferred many costs to local bodies to avoid raising income taxes. Large infrastructure projects that really should be paid for by the whole country are now expected to come out of rates.

Brendon Harre said...

I believe this sinking lid policy for local government is a sign of the old rogernomic thinking that government is part of the problem not the solution. This is very depressing as 30 years of this sort of thinking has not produced the high income successful country that was promised. There are alternative ideas about the relationship between the private sector and government in the economy. My preference is the German/Northern Europe idea that the free market is not a perfect competitive system but a system that requires government regulations, institutions and infrastructure. New Zealand should be discussing what the best combination of these provisions.

Anonymous said...

You're out of your tree, gorilla. Stick to amoeba surgery and read Chris's link, the Shand Report, or LGNZ's FAQs to see how totally wrong you are. Government requirements have zilch to do with your rate levels.

On the contrary, the Alliance's Sandra Lee gave councils far more power. It's entirely their ball game.

The problem lies with their voters: those who continue to either stay at home in righteous disgust, and those who select car- and real-estate salesmen, farmers, 4th-rate celebrities, and any idiot rich enough to pay to put their slippry mug in the local rag enough, to their local councils.

Said candidates and representatives inevitably emanate from the moneyed Right; where the ability and inalienable right to stand before a crowd and let the wind blow one's tongue in excrutiangly tedious and illogical nonsense is conferred as a birthright.

And which will thus confer power.

Power which they have deployed over generations to inexorably, consistently, and relentlessly transfer the rating burden from the rich to the poor.

One day an independent journalist will emerge to prove this: and to demonstrate that the current NZ local body rating system is the most regressive taxation system that the world has ever seen: that the UAGC (which the Shand Report recommended for abolishment) is the exact equivalent of a poll tax - or Uniform Tax, which even the NACTzies would never dare embrace.

And how the proliferation of User Charges for essential (and council-enforced usage) services has benefitted commercial and farming interests by millions:

And how Federated Farmers, Business Associations and Employer groups have spent millions lobbying local government over decades.

One day he or she might even take ten minutes to research how the so-called "efficiencies" of the massive 1989 amalgamations have affected rates on individual properties.

But that would depend on an independent journalist or researcher ever emerging. Who is prepared to interview their grandmother. Can't see it.


Anonymous said...

Wow I didn't realise that you were as out of touch as this! We are faced with a planned rate increase (from the District Council)of 4.8% per year for the next ten years and yet we get no direct council services at all-no water, sewage or rubbish collection just a poorly maintained road. The local library doesn't really deserve the name and yet the council produces ten year plans....They plan to replace the crockery in the local hall but do nothing to improve the most vital services.
Now the regional council plans to build a $34 headquaters.
Both councils keep hiring more and more staff.
You should be comparing our councils to Greece-they will sink under debt still without a coherent set of priorities.
As I see it the only way to force councils to stick to their knitting is to limit their growth.

Chris Trotter said...

To: Anonymous@8:27

Who is "we"? What local authorities are you referring to? Until you supply this basic information your comment cannot be responded to sensibly.