[comment caption=Do you think councils are spending outside their brief?]Councils are in for a shock if Local Government Minister Rodney Hide delivers on a promise he made today to rein in rates.
The ACT Party leader, a persistent critic of rate rises, said that over many years successive governments had believed councils should "stick to the basics" but the last Labour government gave them much wider purposes and powers.
"In many cases this has contributed to huge increases in spending and rates, which the Government is determined to rein in to reduce the burden on households and businesses," he said.
"I will be looking at ways of achieving this goal."
Mr Hide praised a Local Government Forum report, released today, which said local authorities had strayed, at great cost, far beyond their core role of providing vital services to communities.
"Local authorities have got into the habit of steadily expanding their brief to provide a whole range of services that could easily be provided by the private sector," the report said.
"Part of the problem is confusion over what a `public good' actually is. It is not whatever might be deemed `good' for people, or anything at all that might be regarded as in the public interest."
The report said services like street lighting, civil defence and footpaths were examples of "being in the public good" because they could not be charged for on a user-pays basis and no one else would provide them.
But councils were also involved in a large array of "private good" activities including ports and airports, public transport, parking facilities, marinas, holiday accommodation, cinemas and Lotto shops.
"It is not appropriate for councils to undertake these private good activities," the report said.
"Politicians are commonly not experts in investing in businesses and managing them."
The report said public sector enterprises were less efficient, on average, than private enterprises because of flawed, politicised incentives and inadequate information.
"Exiting from private good activities would also allow councils to focus more intensively on their important public good roles and perform them better," it said.
"Such a strategy would be one of the most important ways of improving the contribution of the local government sector to the economy."
Mr Hide said the report reflected his own view that councils should stick to doing the basics well and giving good value and service to ratepayers.
The Local Government Forum said it was going to meet Mr Hide to discuss the report and ways to implement its recommendations.
One of its suggestions was amending the Local Government Act to define core public good activities and allowing councils to undertake other activities only if ratepayers gave approval through a referendum.
Forum members are Business New Zealand, the Electricity Networks Association, Federated Farmers, the Business Roundtable, New Zealand Chambers of Commerce and the Retailers' Association.
