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Local authorities such as the Dunedin City Council should be left to tackle debt levels and rates rises without new controls imposed by the Government, Dunedin Mayor Dave Cull says.
Mr Cull and Dunedin City Council chief executive Paul Orders made their case this week, while presenting the council's submission on proposed local government reforms to a select committee hearing in Christchurch.
The reforms - unveiled in March - included plans for new benchmarks to assess the financial performance of councils, as part of a push to control local government debt levels and limit rates increases.
Mr Cull told the Otago Daily Times rates and debt were two issues already at the top of his council's agenda, and the Government's proposed changes risked "unintended negative consequences".
A proposed limit on rates rises would erode councils' previously "unfettered" ability to raise revenue through rates, he said.
That could worry banks and lead to higher interest rates being charged when lending to councils, driving up local government debt-servicing costs, he said.
The DCC was already taking steps to limit rates rises and pay off debt faster, without Government intervention, he said.
"The issues of debt constraint and rate constraint certainly resonate with us ... We recognise as a council we've got too high levels of debt and we're definitely setting rates rise targets that are modest.
"We're doing the things that this Bill is aiming to impose, and what we're saying is actually you're better to have them driven from the council, rather than impose it, because you'll end up with unintended negative effects."
Plans to remove the "four wellbeings", and instead force councils to focus on cost-control and core services also risked eroding economic development initiatives, he believed.
For example, the quality of a city's housing was often seen as a social issue, but in Dunedin also influenced the city's ability to attract skilled staff, meaning it affected "quite dramatically" the city's economy, he said.
"If you constrain councils' ability or activities in those other areas, then you may actually be constraining their ability to develop their community economically.
"If the place is a slum, it's going to be hard to get reasonably high-paid individuals to come here if they can't get a decent home."