More than meets the eye to ‘Ratepayers’ Report’
A national report into council finances didn’t tell the whole story, writes Dave Cull.
It’s hard to tell if the Taxpayers’ Union is again being deliberately obtuse in its latest analysis of council finances or if it’s plunging to a new low by misinterpreting data to make unfair comparisons of their financial performance.
Last week, the union released already publicly-available data on local councils in what it calls a ‘‘Ratepayers’ Report’’.
The organisation got its first attempt at this data fundamentally incorrect in 2014. There were so many errors that the material was withdrawn.
While this year’s attempt is an improvement on the past, the effort nonetheless still falls short of being useful. For example, the report divides performance factors by the wrong number or type of ratepayers, and the accompanying media releases criticise performance without providing even a tiny degree of context.
The Taxpayers’ Union’s analysis is as about as accurate as judging the fairness of car prices without knowing whether they’re electric vehicles, SUVs or Formula One racers.
Firstly, the basis of comparison is wrong. Dividing factors such as debt, rates and salaries by what the Taxpayers’ Union calls ‘‘residential ratepayers’’ creates a number of problems.
For a start, it ignores the fact that businesses and farmers also pay rates. For example: in Central Hawke’s Bay, there are less than 8000 ratepayers however only 25 per cent of these are residential – this grossly inflates the cost per actual ratepayer when we start examining factors such as assets and debt. It also ignores the fact that the number of rating units is not the same as the number of people for whom councils provide services. Resulting comparisons are therefore meaningless.
Secondly, the Taxpayers’ Union table excludes all context. Waitomo District Council is the second-most indebted, based on the misleading ratepayer ratio. But the report has removed all the reasons for this position.
In fact, Waitomo has just finished one of the most significant investments any council will make – a comprehensive upgrade of the district’s water and wastewater infrastructure. This asset will be used across many generations, and will be paid back over a long time. This is sound inter-generational stewardship. The council deserves congratulations, not criticism.
New Zealand’s 67 district and city councils are incredibly diverse, spanning Auckland with 1.5 million residents, to Kaikoura with around 3750. Each council has different circumstances and has to provide different services based on these.
But providing useful data and information to ratepayers is important. This is where we agree with the Taxpayers’ Union. This is why Local Government New Zealand set up an independent assessment programme for local government. Participating councils are assessed by independent experts every three years, given an overall rating on a nine-point scale from AAA to C, with the results then publicised.
The key point is that it is an independent system. It measures councils in indicators across leadership, finance, service delivery and community engagement. These areas were determined after carrying out independent research with individual and business ratepayers to find out what was important to them.
Unsurprisingly, it is a range of factors beyond simple financial metrics. Councils are placemakers that make communities zing. Financial performance is important but so are many other things that make life worth living. The finalised assessments and ratings of member councils are public, placed in context, and constructive – showing where and how an individual council might choose to enhance its value proposition to its community.
In contrast, the Taxpayers’ Union’s shallow league table contributes almost nothing to ratepayers’ understanding of the issues facing their areas or ways to improve things. But there is something even more worrying in their condemnation of local government. It looks like this Wellington-centric lobby group simply does not trust the voters, ratepayers and residents of these regions to make good decisions.
Every council’s financial reporting represents the push and pull of a community that has worked out its interests. It has worked out whether it wants a council that is a mini, an SUV or a race car. It has worked out how much it wants to invest in making its town or region a place they enjoy living in.
There is a democratic process that goes into making those funding decisions every year and a comprehensive long-term planning process every three years. Ratepayers can also make their judgment on that spending at the ballot box each election.
The data the Taxpayers’ Union uses to criticise local authorities represents the result of a democratic process. Rightly, it’s left to voters, rather than the union, to judge the performance of councils. And in a democratic society, that’s how it should remain.
Every council’s financial reporting represents the push and pull of a community that has worked out its interests.