Monday, December 13, 2010

The Rodney that super-sized your rates

When Rodney Hide began super-sizing the Auckland Council, we heard him blathering that the "efficiencies" from the exercise meant that rates could be cut.

They won't be.

Rates will be going up. By nearly six percent in some places; around nine percent in others.

You can thank Rodney Hide for that entirely predictable outcome.

_RodneyHood-ScumIt was said too that the super-sizing would give planners more power to "plan" the city according to their own vision.

They will be.

And that's one primary reason that rates will be going up.

Because when you have an ego the size of a planner, and a bureaucracy the size of this one, then everything begins to look like it should be a monument to your “vision.”

And those visions never come cheap.

Ironic, isn’t it, that the both the super-sized government and the rates increase were delivered by the leader of a party purporting to believe in lower taxes, smaller government, and restraints on political power.

Apparently not.

So given that Epsom voters will be opening their rates demands about the same time next year they’ll be opening election campaign literature—many of whom will be wondering why their MP devoted all his party’s hard-won political capital to raising their rates, and to expanding the power of planners over their lives and property—I’m looking forward to watching voters to take a very large Rodney on him at every public meeting, and in the final vote.

He will have earned it.

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21 Comments:

Anonymous CT said...

I can't agree with you on this. It is the elected council driven by the elected Mayor that set the rates. They need the money to spend on the promises of things they would do if elected. If the ratepayers elected big-spenders then the ratepayers can't blame anyone but themselves. Surely?

12/13/2010 09:36:00 am  
Blogger PC said...

Okay, so perhaps you could fill in the missing words for me then.

The reason for super-sizing Auckland's council was . . .

12/13/2010 10:01:00 am  
Blogger Berend de Boer said...

One of the reasons was that if you wanted to open a business in the next street, you suddenly had to deal with an entirely different council. There were many good reasons to amalgamate, and I agree, many good reasons not to.

12/13/2010 10:45:00 am  
Anonymous Chris Diack said...

Oh dear.

The rating proposals are based on the spending plans and rate increases of the previous councils in the long term council community plans inherited from them by Auckland Council.

Sort of puts a spear though your argument about the many Councils costing less and wasting less.

I would wait and see what the final decision is.

By operation of logic the rate increases cannot be attributable to the new Auckland Council since it has only existed since 1 November.

12/13/2010 12:20:00 pm  
Anonymous CT said...

Chris, then based on your argument there is nothing in the rates increases that could be attributed to the super city. Am I reading that right?

And increases in the next round would be attributed to the new council.

So the super-city can be made cheaper by the economy of scale; or costs could be driven up as profligate spenders see the ratepayer as a bottomless wallet.

12/13/2010 02:06:00 pm  
Anonymous CT (Christopher Thomson) said...

Just as an aside; has a candidate ever ran for a local body on the platform of actually forcing rates down? If they have how successful were they?

12/13/2010 02:20:00 pm  
Blogger peterquixote said...

I think Epsom will still reluctantly vote for Hide. They want a Nat Government,
So they vote for a Nat candidate, and MMP balances this out to no increase in centre right votes.
Vote for Rodney and they get the increased number at ACT bring with MMP.

Winston is looking increasingly likely, Key has played into his hands,
NAT wil need every centre right seat it can muster.

12/13/2010 09:51:00 pm  
Blogger PC said...

@Chris:

Oh dear.

The new council itself attributes the increase to amalgamation costs.

Examination of their plans indicate we can add monumental new transport plans as another reason.

The fact is that this super-sized council will NEVER achieve cost-savings. You know it. They know it.

So if you could answer the original question please: "The reason for your hero super-sizing Auckland's council was . . . "

And as a supplementary question, please explain how that relates to the supposed principles which your hero's party purportedly upholds.

12/14/2010 09:28:00 am  
Blogger libertyscott said...

Local government in New Zealand exists because central government has created it, and granted it powers.

The simple question: What should be the role of the Auckland Council?

The answer:
Labour - Whatever its elected councillors want it to do;
Alliance - Ditto;
Greens - Ditto;
National - Ditto;
ACT: Ditto.

Quite simply Rodney Hide has failed royally to get ACT Policy adopted for the highest profile portfolio ACT has. Compare it to when Peter Dunne got a new bureaucracy (he had one seat!) and a billion dollar motorway.

All parties in Parliament have effectively supported the policy of Sandra Lee, and no ACT or National supporter can pretend that a vote for either changed anything in local government policy at the last election.

12/14/2010 11:04:00 am  
Anonymous Chris Diack said...

Mr Cresswell should look to his own link.

Of course the Mayor wants to cloud the picture amalgamation costs – he is a big spender who simultaneously promised rating restraint.

The fact is that spending and rating is drawn from the existing long term council community plans. The fact is Auckland Council is 6weeks old – it inherits both the revenue and spending plans of the former LTAs. It has choices to make. Nor are any of the Mayor’s big spending transport proposals in the mix yet.

Sorry amalgamation costs and savings are a smokescreen – they have little to do with what is actually occurring. And sorry on a technical point it isn’t the Auckland Council saying amalgamation costs are causing rate increases in whole or in part – it’s a political statement from the Mayor.

In addition, ahead of the Auckland Council most existing TLAs advanced projects in the LTCCPs and went light on rate increases needed to pay for them.

Mr Cresswell also falsely claims that “savings” were the rationale for the Auckland Council. That is simply not true. He sets up a straw man.

The cost of Government is always determined by political choices made by politicians and voters. That wasn’t going to change with a new Council.

Regarding principles, I am not sure I really want to deal with the Liberterianz naïve approach to local government drawn largely from the US which isn’t particularly relevant to our history or status as a tiny Island nation.

The idea of a patchwork of completing little units of local government where one can move between then (because there are not transaction costs here) or dispatch them for another (always little) replacement is Alice in Wonderland stuff. The idea that previous units of local government in the last century meaningfully competed against one another and did not operate in concert (particularly over rating) is to re-write history.

Nor is there any evidence that ultra-vires meaningfully restrained local government – Parliament simply changed the law on demand.

Frankly the only real meaningful restraint on local government isn’t rules based; it’s the willingness of ratepayers to fund spending through to and beyond each election.

12/14/2010 12:28:00 pm  
Blogger PC said...

Chris Diack should look to his principles, or lack thereof.

In fact the amalgamation was sold on * * cost savings for most Aucklanders falling, costs "generally at the lowest existing levels," which was never, ever going to happen.
* * power to the planners, which always was.

So if Chris could now answer the question both he and his hero have been avoiding all this while, "The main reason for your hero super-sizing Auckland's council was . . . "

Because we'd all really like to know. As will Epsom voters next year.

12/14/2010 12:55:00 pm  
Anonymous Chris Diack said...

Again Peter repeats a total falsehood. The new Auckland Council was not “sold on” cost savings or lower rates.

Why. Because these are dependent on future political choices.

Erroneously he is picking up on the rationalisation of building consent fees and dog fees. This is a consequence of moving to the new structure of local government in Auckland not the reason for it.

Straw-man-ing this is a very poor substitute for someone who is so philosophically erudite.

Google (you know what that is Peter) just one statement from Rodney Hide that says the purpose of moving to rationale structure for local government in Auckland was cost saving or lower rates.

12/14/2010 01:17:00 pm  
Anonymous Craig M said...

From my 3 second google search:

Super City designers identify $250m in savings

12/14/2010 01:41:00 pm  
Blogger PC said...

So now, Chris, please answer the question: "The main reason for your hero super-sizing Auckland's council was . . . "

In making your answer, if you'd like to make reference to your party's so-called principles, that would be good too.

12/14/2010 01:44:00 pm  
Anonymous Chris Diack said...

Yes. The ATA canned some dopey future spending out of the LTCCPs. They rationalised fees. They also significantly reduced senior management costs.

What you are missing is that these were the consequences of the transition. They were not the rationale.

Nowhere in the link above does Rodney Hide say that the rationale for moving to unified governance structure for Auckland is cost saving or lower rates.

The reason you cannot find this statement in the link above (or anywhere else) is because it was not made. (come on google harder)

And the reason it was not made is that costs and rates are largely dependent on future political decisions. Rodney Hide is well aware of this.

So Peter is wrong on the attribution of any rate rise and he is wrong on claiming that the publicly stated rationale for a unified structure was lower costs and rates.

Two wrongs and all that...

12/14/2010 02:03:00 pm  
Blogger libertyscott said...

So even given if PC is wrong about the planned rates rise (which will simply be worse than is stated), the word "efficiencies" was stated as a reason for a mega all powerful Auckland Council.

Why did ACT embrace the Labour/Alliance/Green Party view of what local government's role is?

Why did National (besides the "we don't like to overturn most things Labour did because people elected it to do those things as the time, even though we opposed them)?

12/14/2010 10:02:00 pm  
Anonymous Chris Diack said...

Scott:

Let’s take this bit by bit.

First. Rodney Hide isn’t the ACT Minister of Local Government. He is the Minister of Local Government (who is also has another distinct role as ACT Leader). These things matter in the Westminster model of Ministerial Responsibility. National supported general competence prior to the last election. General competence is the Government’s policy. Ministers are required to support Government policy. That said there has been some real reforms but general competence largely remains the model of local government here.

Second. In terms of Auckland, ACT campaigned between 2005 – 2008 on a unified common local government structure in Auckland. ACT kept its promise to voters.

Three. The Tiebout stuff bears little relation to what was actually happening in local government in Auckland. Frankly it is fantasist stuff. There was already considerable contracting out often to the same contractors (eonomics dictated this). There was no competition between the LTAs they largely operated in concert on rating for example and differences between them were not meaningful. The transaction costs of both moving between them or dispatching and replacing one or other with another little one were considerable. And to top it off we had overlapping jurisdictions with bureaucrats having similar roles and responsibilities in different Councils covering the same geographical area. Finally Auckland functions economically and socially as a whole yet the lines on the map did not reflect this.

Four. Facts actually matter. There is no evidence that the doctrine of ultra vires acted as a restraint on local government. Nor is there any evidence that they are now doing stuff they that could not have done under the LGA74. As stated previously, Parliament was always willing to pass ad hoc legislation for local government. Any claim that rules based restraint works isn’t actually supported by the evidence here. It must therefore be a theoretical or model based assertion.

Five. The real restraint on local government is the willingness of ratepayers bear the financial burden through to and beyond the next election.

12/15/2010 12:30:00 pm  
Blogger libertyscott said...

Chris:

1 - Sandra Lee implemented some key Alliance policies as Minister of Local Government, such as abolishing non-residential property owner franchise, significant limits on private sector involvement in water. I see next to no evidence that Rodney Hide has represented any of the views of the people who elected him in his non-Cabinet Ministerial portfolio.

2 - National voted against the power of general competence in the Local Government Bill 2001, but I am far from surprised that it has changed its policy without actually being explicit about it. ACT voted against it too, but it is nice to see the foggy cloud of transparency on this. Tick two big wins to Labour and the Alliance for changing the views of their "opposing" parties.

3 - If true (I didn't notice this) then more shame ACT. Again a big foggy cloud of transparency.

4 - Why does this matter in economic or other terms? The councils could have chosen to merge, but then if you believe in the power of general competence anything goes. The overlapping functions were almost entirely because of the existence of the ARC, which saw itself as having a role beyond what it was originally set up to have (and which LGA 2002 had since allowed it to have).

5 - Well this is simply not true. Regional Councils were severely restrained. ARC could never buy trains or own bus or railway stations under LGA 74, look at it now as the boondoggler of the southern hemisphere. TLAs had less restrictions of course. Again, why does local government exist? The National/ACT view appears now to be the same as Labour "to do anything it wants".

6 - The real restraint on local government is Parliament - it could tighten legislation to be highly prescriptive about what it does. Ratepayers are a minority, and frankly if the council screws you over within three years having a vote is precious little recourse. The real remedy is to leave.

In short you are supporting unbridled power of local government, to act to borrow and spend up large, compete with the private sector, subsidise whatever it wishes and tax ratepayers to the hilt. The LGA should act as the constitutional restraint on local government - but we now know that as far as National/ACT is concerned ratepayers can go to hell - vote for change and put up in the meantime.

I spent some years working through the local government reforms, and there were many statements made by those parties damning what it could do, and I could see the passion in the eyes of the left who saw LGA 2002 as the passport to growth in local government. Shame those who claimed to oppose it have the passion of a neutered mole.

12/15/2010 09:56:00 pm  
Anonymous Chris Diack said...

Scott:

You will have to work harder than that - a pretty poor effort.

1. Buzzt. Incorrect. Ministers outside cabinet are bound by collective responsibility within their portfolio responsibilities. No one elected Rodney Hide to a “non cabinet Ministerial portfolio” he was appointed by the PM. Actually what you attribute to Lee on the franchise was largely Michael Bassett’s doing some 12 years earlier.

2. Buzzzzzt. Wrong answer. History lesson aside, National accepted general competence by 2008 and quietly promised the local govt sector that there would be no change on this. The power of general competence is Government policy.

3. Buzzzt. Incorrect. ACT has no responsibility for the dysfunctional structure of local government as it existed prior to the Auckland Council. Sorry it isn’t an issue of transparency that’s just how things were. Reality trumps economists model.

4. Buzzzzzt. Wrong again. Last time I looked the Auckland Regional Council was part of the structure. And actually you spear your own arguement. The ARC’s consistent desire to expend its functions is a real world example of how attempted a rules based limit on capacity didn’t work. And if you are a “fat controller” in one Council you would not agree to a merger because there are less "fat controllers" overall.

5. Buzzzzt. Wrong. The forebear of the ARC was the ARA set up under ad hoc legislation. It ran the buses. The point remains the TLAs were unconstrained. And are all that they were doing under the LGA 2002 they could have done under the LGA74 or ad hoc legislation.

6. Buzzzt. Hello. This is a theoretic assertion. It’s not supported by evidence in New Zealand. Ratepayers are not the minority overall – still most of those who are voting are ratepayers. No I don’t support all the things you attribute to me. In essence one needs to make the political case for limited Government both central and local. You cannot simple create a rule to ensure it if that isn’t broadly supported. It’s an argument one must have over and over and each generation must learn the lesson again. And the bottom line (as Len Brown is discovering) one cannot simultaneously promise big spending and low rates.

You are being overdramatic regarding “the victory” of the political left in local government in 2002. Just look at their faces; most are not happy campers. They hate the iron law of economics.

12/15/2010 11:08:00 pm  
Anonymous Chris Diack said...

Scott:

You will have to work harder than that - a pretty poor effort.

1. Buzzt. Incorrect. Ministers outside cabinet are bound by collective responsibility within their portfolio responsibilities. No one elected Rodney Hide to a “non cabinet Ministerial portfolio” he was appointed by the PM. Actually what you attribute to Lee on the franchise was largely Michael Bassett’s doing some 12 years earlier.

2. Buzzzzzt. Wrong answer. History lesson aside, National accepted general competence by 2008 and quietly promised the local govt sector that there would be no change on this. The power of general competence is Government policy.

3. Buzzzt. Incorrect. ACT has no responsibility for the dysfunctional structure of local government as it existed prior to the Auckland Council. Sorry it isn’t an issue of transparency that’s just how things were. Reality trumps economists model.

4. Buzzzzzt. Wrong again. Last time I looked the Auckland Regional Council was part of the structure. And actually you spear your own arguement. The ARC’s consistent desire to expend its functions is a real world example of how attempted a rules based limit on capacity didn’t work. And if you are a “fat controller” in one Council you would not agree to a merger because there are less "fat controllers" overall.

5. Buzzzzt. Wrong. The forebear of the ARC was the ARA set up under ad hoc legislation. It ran the buses. The point remains the TLAs were unconstrained. And are all that they were doing under the LGA 2002 they could have done under the LGA74 or ad hoc legislation.

6. Buzzzt. Hello. This is a theoretic assertion. It’s not supported by evidence in New Zealand. Ratepayers are not the minority overall – still most of those who are voting are ratepayers. No I don’t support all the things you attribute to me. In essence one needs to make the political case for limited Government both central and local. You cannot simple create a rule to ensure it if that isn’t broadly supported. It’s an argument one must have over and over and each generation must learn the lesson again. And the bottom line (as Len Brown is discovering) one cannot simultaneously promise big spending and low rates.

You are being overdramatic regarding “the victory” of the political left in local government in 2002. Just look at their faces; most are not happy campers. They hate the iron law of economics.

12/15/2010 11:09:00 pm  
Anonymous Chris Diack said...

Scott:

You will have to work harder than that - a pretty poor effort.

1. Buzzt. Incorrect. Ministers outside cabinet are bound by collective responsibility within their portfolio responsibilities. No one elected Rodney Hide to a “non cabinet Ministerial portfolio” he was appointed by the PM. Actually what you attribute to Lee on the franchise was largely Michael Bassett’s doing some 12 years earlier.

2. Buzzzzzt. Wrong answer. History lesson aside, National accepted general competence by 2008 and quietly promised the local govt sector that there would be no change on this. The power of general competence is Government policy.

3. Buzzzt. Incorrect. ACT has no responsibility for the dysfunctional structure of local government as it existed prior to the Auckland Council. Sorry it isn’t an issue of transparency that’s just how things were. Reality trumps economists model.

4. Buzzzzzt. Wrong again. Last time I looked the Auckland Regional Council was part of the structure. And actually you spear your own arguement. The ARC’s consistent desire to expend its functions is a real world example of how attempted a rules based limit on capacity didn’t work. And if you are a “fat controller” in one Council you would not agree to a merger because there are less "fat controllers" overall.

12/15/2010 11:11:00 pm  

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