Focused spending needed to combat economic impacts of COVID-19

LGNZ President Dave Cull says that in light of the COVID-19 crisis, councils around New Zealand are reprioritising spending and minimising rates increases, but that a request from the Taxpayers’ Union to implement a 12-month rates freeze is misguided and has the potential to put the brakes on economic recovery.

LGNZ is the peak body representing New Zealand’s 78 local councils, providing a unified voice for local government and a pathway for continuous improvement through CouncilMARK™, the sector’s independent assessment and continuous improvement programme.

“We absolutely understand the financial pressure that communities will increasingly face as the economic impact of COVID-19 hits home,” said Mr Cull.

“A number of councils have already stated that they are changing their rating plans in light of this crisis, and every councils is looking at where they can tighten their belts and what financial tools are at their disposal. This includes deferrals and raising cheap debt to minimise the financial impact of rates on households and businesses - after all borrowing has never been cheaper.”

“We know there is going to be financial pain in our communities.  Simply reducing spending would mean adding people to benefit queues while reducing operational capacity at a time when communities want councils at the heart of local emergency responses. As providers of drinking and wastewater services, councils are essential lifeline infrastructure providers and in times of crisis such as these our costs may even go up – not down.”

“Secondly, local government is a key infrastructure provider. It should be remembered that 88 percent of New Zealand’s roading network was part funded by rates. If central government is looking to boost economic activity by lifting infrastructure spending, financial constraints on council balance sheets will severely constrain what projects go ahead.”

“Helpfully, LGNZ is currently working extremely closely with central government and the Society of Local Government Managers on the best set of funding tools and options to help us get through this crisis.”