Challenging Times for Local Government


Challenging Times for Local Government

Thousands of PSA members work for local authorities around New Zealand.

They provide their fellow ratepayers with the best possible libraries, parks and swimming pools, civil defence, clean streets and safe buildings.

With income from sources such as parking, pools and airports drying up during lockdown, Covid-19 has reduced the revenue they have to provide those services.

BUDGET OPTIONS

That’s left councils all over the country trying to work out how to deal with the shortfall.

Councils are more restricted in their borrowing options and cannot rely on deficit spending to see out a crisis to the same extent as central government can.

However, they do have options. Most importantly they can recognise they don’t have to deal with this challenge in one financial year – they can balance their budgets over several years to smooth the impact.

Most can also safely increase their debt levels and the Government is looking at ways to enable councils to borrow more. The Office of the Auditor-General has advised it is comfortable with councils taking on more debt in the current circumstances.

Other options include raising rates or fees, selling assets, cutting spending or postponing planned projects and infrastructure maintenance.  Most councils appear likely to deploy more than one of these approaches.

DIFFICULT DECISIONS

Auckland Council, for example is facing a $525 million budget hole. Staff earning over $100,000 a year have been asked to take voluntary pay cuts. Hundreds of temporary and contractor workers have been let go, and staff vacancies are being left unfilled.

The Council is considering an Emergency Budget that could see lower than originally envisaged rates increases, which could impact on services. The PSA has put in a submission on the draft budget and is working with the Council with the goal of preserving jobs and services.

Invercargill City Council proposed pay cuts during the lockdown, until the PSA challenged them about it, but they are now proposing restructuring and redundancies.

IMPORTANT DEBATE

This debate is important to understand. There are lobbyists promoting rates freezes and budget cuts without understanding the negative impact those would have on communities, and there are councils who might be tempted to go along with them.

Extra savings per household would be small, but the impact on council services and the low-income people who rely on them would be significant. Council expenditure on capital works and wages is also important to local economies.

With a number of councils considering rates freezes and budget cuts, all union members must be prepared to defend our community services and the people who make them possible.

 

 

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