1 00:00:00,120 --> 00:00:03,239 Speaker 1: Afternoon. The government's putting a stop to your constantly ballooning 2 00:00:03,320 --> 00:00:05,880 Speaker 1: rate spill. The councils will now only be allowed to 3 00:00:05,960 --> 00:00:09,119 Speaker 1: raise rates by between two and four percent unless they 4 00:00:09,119 --> 00:00:11,960 Speaker 1: have permission from a government appointed regulator to go beyond that. 5 00:00:12,000 --> 00:00:13,880 Speaker 1: Water rates and other fees and levies will not fall 6 00:00:13,960 --> 00:00:16,600 Speaker 1: under the cap. Simon Watts is the Local Government Minister 7 00:00:16,680 --> 00:00:19,320 Speaker 1: High Simon hi Heather. Why four percent? 8 00:00:20,120 --> 00:00:23,880 Speaker 2: Well, four percent represents the long run economic growth number. 9 00:00:24,000 --> 00:00:28,040 Speaker 2: That means that council's got a clear cap on total expenditure. 10 00:00:28,440 --> 00:00:30,560 Speaker 2: We're set a range between two and four the twos 11 00:00:30,600 --> 00:00:33,480 Speaker 2: at the midpoint for inflation. We think that's a sensible 12 00:00:33,520 --> 00:00:36,200 Speaker 2: band for councils to maintain their expenditure within. 13 00:00:36,479 --> 00:00:38,480 Speaker 1: Okay, I mean this is going to be tough, isn't 14 00:00:38,479 --> 00:00:41,279 Speaker 1: it Because in the last financial year only five out 15 00:00:41,320 --> 00:00:43,080 Speaker 1: of seventy eight councils managed to come under that. 16 00:00:44,360 --> 00:00:46,199 Speaker 2: Yeah, it's going to be tough, Heather, But guess what 17 00:00:46,600 --> 00:00:50,440 Speaker 2: it's been tough on everyone households, businesses, and you know, 18 00:00:50,560 --> 00:00:53,880 Speaker 2: you think about those on fixed income in particular, double 19 00:00:53,880 --> 00:00:56,840 Speaker 2: digit rate increases, some up to twenty percent. It's just 20 00:00:56,920 --> 00:00:59,600 Speaker 2: simply not feasible and that's what we've been hearing loud 21 00:00:59,640 --> 00:01:02,400 Speaker 2: and clear from rate payers. We've got a range, we've 22 00:01:02,400 --> 00:01:05,840 Speaker 2: got a model that we believe will ensure that councils 23 00:01:05,880 --> 00:01:07,400 Speaker 2: are going to be able to get to that point. 24 00:01:07,840 --> 00:01:09,280 Speaker 2: And at the end of the day, you know, I 25 00:01:09,319 --> 00:01:12,120 Speaker 2: think this is a sensible policy and it's going to 26 00:01:12,120 --> 00:01:15,120 Speaker 2: be one that protects and supports rate pers. 27 00:01:14,800 --> 00:01:17,240 Speaker 1: Are you worried about the third maintenance where instead of 28 00:01:17,280 --> 00:01:19,200 Speaker 1: cutting you know, instead of cutting the nice to have 29 00:01:19,360 --> 00:01:21,080 Speaker 1: that we would like them to, can't they start just 30 00:01:21,440 --> 00:01:23,640 Speaker 1: not fixing the pipes like Wellington's done. 31 00:01:24,120 --> 00:01:28,240 Speaker 2: Well, look, no one's capping infrastructure. We're capping inefficiency. And 32 00:01:28,440 --> 00:01:31,559 Speaker 2: I said today that New Zealand has not got low 33 00:01:31,560 --> 00:01:36,240 Speaker 2: productivity because councils were too disciplined. That's actually the opposite. 34 00:01:36,319 --> 00:01:39,440 Speaker 2: And so that's why we're coming in with this reform. 35 00:01:40,040 --> 00:01:43,320 Speaker 2: We know that infrastructure is a challenge and working our 36 00:01:43,319 --> 00:01:46,000 Speaker 2: way through. You've seen that with our water reforms. But again, 37 00:01:46,160 --> 00:01:50,279 Speaker 2: using the GDP economic growth rate is an upper band 38 00:01:50,680 --> 00:01:53,640 Speaker 2: provides us with a long run target, which we think 39 00:01:53,680 --> 00:01:56,760 Speaker 2: is appropriate. And I've had an independent reference group led 40 00:01:56,760 --> 00:01:59,480 Speaker 2: by Cameron Baggery to help develop this policy. They had 41 00:01:59,520 --> 00:02:02,440 Speaker 2: local govern reps and also people from offshore as well. 42 00:02:02,680 --> 00:02:04,360 Speaker 2: They did a lot of thinking around this and we 43 00:02:04,400 --> 00:02:06,680 Speaker 2: believe this is probably one of the first instances of 44 00:02:06,720 --> 00:02:10,440 Speaker 2: the world where they're using a range based target model. 45 00:02:10,960 --> 00:02:14,160 Speaker 1: Look, it doesn't kick intil you know fully in effect 46 00:02:14,240 --> 00:02:16,200 Speaker 1: until twenty twenty nine. Are you worried that in the 47 00:02:16,240 --> 00:02:19,160 Speaker 1: intervening three rate cycles that they have left, they may 48 00:02:19,240 --> 00:02:21,600 Speaker 1: just go healthful leather and raise a whole bunch of money. 49 00:02:22,560 --> 00:02:25,040 Speaker 2: Well, no, it's going to be legislated and in law 50 00:02:25,120 --> 00:02:28,040 Speaker 2: by the first of January twenty twenty seven. The full 51 00:02:28,160 --> 00:02:32,160 Speaker 2: regulated model won't be fully in play by twenty nine. 52 00:02:32,080 --> 00:02:35,000 Speaker 1: So that rates cap. So does the four percent kick 53 00:02:35,000 --> 00:02:35,919 Speaker 1: in in twenty seven? 54 00:02:36,880 --> 00:02:40,160 Speaker 2: It kicks in from twenty seven. First of January twenty 55 00:02:40,160 --> 00:02:42,160 Speaker 2: twenty seven is when the law comes in. And to 56 00:02:42,200 --> 00:02:45,160 Speaker 2: be honest, Heather, I expect counsels out there today. They've 57 00:02:45,160 --> 00:02:47,520 Speaker 2: had a really clear signal from government today that the 58 00:02:47,600 --> 00:02:49,760 Speaker 2: range is two to four and you know, you see the. 59 00:02:49,720 --> 00:02:53,760 Speaker 1: Light and this is important. At which point do they 60 00:02:54,000 --> 00:02:55,640 Speaker 1: have to abide by the cap? 61 00:02:57,000 --> 00:02:59,120 Speaker 2: So that will be once the regulator is in place 62 00:02:59,200 --> 00:03:03,160 Speaker 2: twenty nine point nine, So they've got three faster. 63 00:03:03,040 --> 00:03:05,600 Speaker 1: Yes, but what I'm maybe you can do it faster, 64 00:03:05,760 --> 00:03:07,960 Speaker 1: but in the intervening period, are you worried that they 65 00:03:07,960 --> 00:03:08,240 Speaker 1: will go? 66 00:03:08,360 --> 00:03:08,480 Speaker 2: Right? 67 00:03:08,520 --> 00:03:09,760 Speaker 1: We just need to get it up as high as 68 00:03:09,800 --> 00:03:11,360 Speaker 1: we possibly can to make sure we've got lots of 69 00:03:11,360 --> 00:03:12,040 Speaker 1: income coming in. 70 00:03:12,680 --> 00:03:14,920 Speaker 2: Will you look at how many mayors and councilors got 71 00:03:15,320 --> 00:03:18,040 Speaker 2: taken out at the lost local government elections who were 72 00:03:18,080 --> 00:03:20,680 Speaker 2: not campaigning on reducing rates. I think it's been pretty 73 00:03:20,680 --> 00:03:23,200 Speaker 2: clear from rate payers. They're telling their counselors, get with 74 00:03:23,280 --> 00:03:26,040 Speaker 2: the program. We want you to be managing your budgets 75 00:03:26,040 --> 00:03:28,880 Speaker 2: like households are. Now we've got a clear signal around 76 00:03:28,919 --> 00:03:30,160 Speaker 2: what the expectation is on that. 77 00:03:30,240 --> 00:03:33,440 Speaker 1: Okay, the exemptions, I mean if one of the exempts, 78 00:03:33,600 --> 00:03:35,960 Speaker 1: So the exemptions are obviously things that you can't expect, 79 00:03:36,000 --> 00:03:39,000 Speaker 1: you can't anticipate like that traditional circumstances, right, Yeah. 80 00:03:39,040 --> 00:03:39,560 Speaker 2: Absolutely. 81 00:03:39,560 --> 00:03:42,320 Speaker 1: One of them is basically to deal with deferred maintenance, 82 00:03:42,320 --> 00:03:44,280 Speaker 1: which I would have thought is basically all councils. 83 00:03:45,120 --> 00:03:48,880 Speaker 2: No, it's there's a mechanism there in certain circumstances, but 84 00:03:48,960 --> 00:03:52,360 Speaker 2: none of these things. It's not a default exemption. You 85 00:03:52,440 --> 00:03:54,560 Speaker 2: have to apply to the regulator. The regulator you have 86 00:03:54,600 --> 00:03:56,720 Speaker 2: to consider that you'd have to provide a plan of 87 00:03:56,720 --> 00:03:58,840 Speaker 2: how you're going to get back to range. And again 88 00:03:59,000 --> 00:04:02,800 Speaker 2: these will be given out only an exceptional circumstances. Pretty 89 00:04:02,840 --> 00:04:05,560 Speaker 2: much well, all councils will need to operate within the 90 00:04:05,600 --> 00:04:07,720 Speaker 2: band unless they've got an exemption and I wouldn't expect 91 00:04:07,720 --> 00:04:08,240 Speaker 2: me need to have. 92 00:04:08,200 --> 00:04:10,520 Speaker 1: That, all right, Simon, thank you very much for your time, Simon, 93 00:04:10,560 --> 00:04:11,880 Speaker 1: what's the local government Minister? 94 00:04:12,560 --> 00:04:12,640 Speaker 2: For? 95 00:04:12,760 --> 00:04:16,040 Speaker 1: More from Hither Duplessy Allen Drive, Listen live to news 96 00:04:16,080 --> 00:04:18,960 Speaker 1: talks that'd be from four pm weekdays, or follow the 97 00:04:19,040 --> 00:04:20,680 Speaker 1: podcast on iHeartRadio.