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SPCA Otago animal manager Grace Hepburn said she believed it was a proposal with no downsides.
''It's obviously extremely beneficial; 80% of the cats we receive are owned but only 20% of these cats are returned to their owners.
''If these cats were microchipped we could simply enter their details into a database and return them to their owners immediately.''
It would also allow the city to deal with the many stray cats in Dunedin, as handlers could distinguish between cats with and without an owner, she said.
Dr Yolanda van Heezik, a senior lecturer in the University of Otago's department of zoology, said many states in Australia already had compulsory microchipping for cats, and such a system was already in place for dogs in New Zealand.
However, many people did not seem to think that such controls were necessary for cats in New Zealand, she said.
''New Zealanders have an attitude that people should be able to own cats without any sorts of controls and the cats should be able to roam freely doing whatever they want.''
Dr van Heezik studied Dunedin's pet cat populations in 2010, and found there were 220 cats per square km across the city.
Of those, 30% caught a bird once a week, meaning 1700 birds were being killed in each square kilometre of the city each year.
However, very little was known about the impact of stray cats on the city's bird population, she said.
A separate international study of people's attitudes to the impact cats had on wildlife, at present being reported on by Dr van Heezik, concluded most people were ignorant of the damage being done.
''The research has indicated that most people don't think that they have an impact on wildlife or think it's very small.''
Last year, Dunedin city councillor Kate Wilson established a ''cat committee'' bringing together different interest groups in the city to discuss the stray cat problem.
The committee met twice last year and Dr van Heezik said it was a significant step in the right direction.
''It's been a really great move by Kate Wilson to get everyone together talking, when in the past there has been a real lack of communication between groups.''
However, committee members did not always agree on how best to deal with stray cats in the city, and it remained a controversial issue, Dr van Heezik said.
She said she had even received hate mail after backing Gareth Morgan's campaign to highlight the impact cats had on wildlife.
Concerns were raised microchipping costs, but Dr van Heezik and Miss Hepburn believed not to microchip cats was irresponsible.
Miss Hepburn said microchipping could be bundled with vaccinations and desexing operations, reducing the cost to owners.
By Liam Macandrew.