Government ‘forces’ surprise $2m-a-year bill onto Chch

Wednesday, 18 December 2024

Two sudden, unexpected water service levies from the Government will cost ratepayers across the country as much as $28 million a year.

The move puts Christchurch City Council’s efforts to keep down rates rises into jeopardy, with councillors being told on Tuesday the impact would be a 0.28% rates increase and that the Government “doesn’t consider it [the new levies] a negotiation”.

It was also “completely ironic”, councillor Yani Johanson told colleagues.

On Monday, Prime Minister Christopher Luxon and Local Government Minister Simeon Brown announced policy intentions for the local government sector and reiterated their condemnation of high rates increases.

“The Government just said they want us to keep rates low, yet they’re forcing a rates increase,” Johanson said.

Councils only found out about the levies - which will cost Christchurch residents $2.1m a year, beginning on July 1, 2025 - two weeks ago.

“It’s an early Christmas present,” said Luke Adams, council’s policy analyst.

The levies are not the only costs imposed on councils by government rules.

In July, Local Government NZ (LGNZ) released a report by the NZ Institute of Economic Research outlining ways government policies put costs onto local councils.

It found that councils faced high sunk costs when policies changed, such as freshwater management, and when fees set by central government were not increased in line with inflation, as with liquor licensing.

LGNZ also released a report from Infometrics in March that found councils faced huge cost increases for infrastructure like roads and pipes, and ballooning insurance costs.

The water service levies, applied to all councils on a per person basis, will cover most work done by Taumata Arowai, the country’s water regulator, and the Commerce Commission’s role in ensuring councils are meeting related obligations.

Cr Aaron Keown said it was “a slippery slope”.

“Are they going to start charging us per person for police? Where is the line?”

“This set-up does nothing to incentivise Taumata Arowai to be super-efficient,” said Cr Sara Templeton. “They could just increase [costs] because they can.”

Cr Andrei Moore said it contradicted the Government’s desire for councils to go back to basics.

“We’re better using money on infrastructure than more Government bureaucracy,” he said.

Brent Smith, the council’s acting general manager of city infrastructure, said he understood a related bill was being heard in Parliament as he presented to councillors.

It was released last week, but at over 300 pages long staff were yet to fully understand what was being proposed and could not answer all questions.

“The timing [of new information] is not very kind to us,” he said.

He said the charge was calculated per person - totalling $5.44 - meaning corporate water suppliers would not have to contribute.

“It’s just being spread about on a population basis because it’s a lot easier to recover,” he said.

“There is an accountability concern,” Adams said. “Costs are being passed on without the ability to reduce them.

“This is another financial burden that has been transferred to ratepayers.”

It comes as the Government announced it would measure councils’ performance with benchmarks for issues such as rates increases, debt, expenditure and road conditions.

The reports, done by the Department of Internal Affairs, are due mid-2025, ahead of the local body elections, and are intended to increase transparency.

Selwyn mayor Sam Broughton, who is also the president of Local Government NZ, said report cards were a welcome way to help residents track council spending, but that was not the same as tracking success.

He hoped the Government would also track how aligned spending was with ratepayer requests, like quality parks, pools and community centres.

“Communities expect that local government are accountable to them. We are directly elected by the people within our communities, not elected or appointed by the Government,” he said.

The Government also announced it would explore limiting rates increases. Broughton said evidence from overseas showed such caps resulted in communities “getting less” and essential infrastructure being “worn down even further”.

Broughton accepted rates had risen “like we haven’t seen before in this country” and that such steep increases were unsustainable.

But in order to lower rates rises, councils needed new funding options, he said, like sharing the GST on new builds and a tourism levy.

Mayor Phil Mauger did not comment on the levies during Tuesday’s meeting. He previously told The Press - in the context of the Government’s new report cards - that it was important for councils to stick to basics and keep rates low.