Douglas says rate rises must be held

Press, 8 April 1988, Page 2

Douglas says rate rises must be held

By

OLIVER RIDDELL

in Wellington

Local authorities have ) been warned by the Minister of Finance, Mr Douglas, that not to moderate their rate demands will be to sign their own death warrants.

This follows up his attack last week on people trying to crank up the rate of inflation.

Mr Douglas said then that he had been appalled at a recent report of proposed local authority rate increases of more than ;20 per cent. j Mr Douglas went further yesterday when he warned local authorities to think again before inflicting double-digit rate increases on their ratepayers this year. I i

Local authorities could not afford to ignore the fact that inflation was falling and that the economy would be weaker this winter, he said. Cost pressures were abating in the economy; but. nevertheless, rate-] payers would simply mot be able to afford rate' increases of that magni-)

tude. j Commercial ratepayers would not be able to pass on' the costs to consumers and residential ratepayers would not have wage increases to compensate them for increased like those proposed — I more than 10 per cent, i Mr Douglas acknowledged that cuts ini Government subsidies were a factor in some areas. But local authorities should be following the lead set by the Government in seeking efficiencies,! reducing non-|essen-ti’al expenditure, reducing debt, borrowing less, and cutting rate demands. Proposals for rates to increase up to 40 per cent had I been reported jin recent! weeks, he said. That showed how out ofl touch with reality some I members of local bodies could be. I |

If the same ruler that the Gibbs health task force had run over health were run over local bodies, huge savings would be possible. Ratepayers should be demanding that every cent of expenditure be ‘justified before any rate increase was considered, Mr Douglas said. The review of local authorities announced in the December 17 tax package would increase accountability and that would produce savings in local government In the meantime, local authorities had a duty to act responsibly and in the best interests of their ratepayers. “Local authorities will sign their own death warrants if they ignore economic realities,” Mr Douglas said.