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2019 Ratepayers’ Report released, methodology explained

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The New Zealand Taxpayers' Union, in partnership with the Auckland Ratepayers’ Alliance, has today published this year's Ratepayers' Report  – online local government league tables – at www.ratepayersreport.nz.

With these league tables, New Zealanders can easily compare their local council performance and financial position for 2017/18 against similar-sized councils and types.

Setting out more than two thousand data points, the Ratepayers' Report provides transparency, and per-household figures ensure fair comparisons between councils. The league tables rank Councils on metrics including average residential rates, staffing costs, and Council liabilities among others.

Taxpayers’ Union Executive Director Jordan Williams says, “Some councils do very well in the league tables, some far less so. All figures were sent to councils twice to double check before release.”

“Rates are still on the rise. On average, councils have increased their rates by $90, with the highest rates increase coming from Manawatu District Council which increased rates by $364, or 14%.”

“The data suggests Auckland ratepayers in particular have cause for concern, with the highest average rates in the country, and council liabilities of $21,941 per household. Auckland Council’s liabilities are second only to earthquake-affected Christchurch, and over three times the national average.”

“Every dollar spent by a Council was earned by a hard-working ratepayer. Ratepayers' Report allows ratepayers to understand if they could be getting a better deal.”

Notable Findings:

  • Christchurch City Council continues to have the highest liabilities per household compared to any other council ($25,402). Auckland Council follows in second place, with liabilities per household of $21,941. "That alone is an incredible figure," says Mr Williams. "Think about every letterbox in Auckland having a $21,941 credit card bill in it thanks to Len Brown and Phil Goff."
  • The average liabilities per household of all councils is $6,197.
  • Auckland Council ranks highest for average residential rates at $3,387. There are 2,473 staff paid salaries greater than $100,000 at Auckland Council and its CCOs.
  • The lowest average residential rates in New Zealand are levied by the Southland District Council ($1,737).
  • The least efficient council in terms of staffing is Westland District Council, with a staff member for every 19 households. The most efficient is Tararua District Council, with a staff member for every 117 households.
  • Only five Councils meet the full criteria for prudent Audit and Risk Committees. Two Councils, Palmerston North City Council and Waimakariri District Council, fail to meet any of the recommended oversight policies. Western Bay of Plenty fails to even have a separate Audit and Risk Committee, which is considered basic financial prudence.

Press releases:

Highest and lowest average rates

Highest and lowest liabilities

Auckland highlights

Wellington highlights

Canterbury highlights

Editors' notes:

Data for the report was compiled by the Taxpayers' Union and was supplied to all councils for review prior to publication.

Ratepayers' Report facilitates straightforward comparison of average residential rates via a formula first used by Napier City Council which allows for an 'apples to apples' comparison of average residential rates and charges, based on each council’s definition of a residential rating unit. Only Westland, Buller, and Waikato district councils were unwilling to provide the Taxpayers' Union with the necessary rates information.

For non-rates figures (i.e. liabilities, personnel costs) we have this year assessed council data using Stats NZ’s 2018 household estimates, with some councils opting to replace this estimate with an exact figure. We have done this because councils have different definitions of what constitutes a residential ratepayer or ‘rating unit’.

Queenstown-Lakes, Taupo, and Thames-Coromandel District Councils objected to the use of Stats NZ’s household figures, as these tend to exclude properties left empty, i.e. baches. As a result, per-household figures for these districts may be somewhat inflated.

Q & A

What is the purpose of Ratepayers’ Report?

Ratepayers' Report provides accountability and transparency to New Zealand ratepayers by allowing them to compare their local territorial authority with others around the country.

Where was the data sourced?

The Taxpayers' Union compiled the data in Ratepayers' Report after reviewing each council's annual report for the year ending June 30, 2018.

Other figures were mostly obtained under the Local Government Official Information and Meetings Act, and cover the 2017/18 financial year.

The data has been sent to each individual authority for their review and error checking prior to public launch.

Population and household data is from Stats NZ.

Where did the group finance figures come from?

They are taken from each Council's annual report. They are council figures, plus all those of subsidiary council-controlled organisations.

Which councils are assessed in Ratepayers' Report?

Of New Zealand's 67 territorial authorities, 66 are examined in Ratepayers' Report. That includes all city, district, and unitary councils, with the exclusion of the Chatham Islands Council (due to concerns surrounding that Council's workload pressure and unique position).

What about regional councils?

While we anticipate including regional councils in future editions of the Report, the data we have on their average residential rates bills is at this stage incomplete. Our research suggests that regional councils charge anywhere from $42 to $553 per residential ratepayer on top of the bill charged by territorial authorities. Gaps in the data and different definitions for residential ratepayers dictate that these figures should be considered as supporting evidence, rather than determinative.

Ratepayers’ Report does, however, include Regional Council information in its analysis of Audit and Risk Committees.

Is this the first Ratepayers' Report?

No. Ratepayers' Report was first published in 2014 jointly by the Taxpayers' Union and Fairfax Media. The Taxpayers’ Union have since published updated versions in both 2017 and 2018. This is the fourth edition.

How are the councils grouped?

Unitary authorities – the 5 territorial authorities which also carry out the functions of a regional authority are grouped.
Metropolitan – the 5 large councils with a population of over 120,000.
City – 6 smaller metropolitan councils with populations between 40,000 and 120,000.
Provincial – the largest group, 27 non-metropolitan councils with population over 20,000.
Rural – the remaining 23 councils.
Regional – the 11 Councils that make up the regions of New Zealand.

How was the average residential rate calculated?

Calculating an 'apples to apples' figure for residential rates is difficult because councils use various mixes of rates, levies, and user charges. Our approach is based on work by Napier City Council to find an average residential rate. The methodology councils were asked to use to calculate the figures disclosed in Ratepayers' Report is available here.

While we think this approach is useful and fair, the average residential rates figure should be a guide only. It does not, for example, factor in councils' reliance on commercial rates.

Unitary authorities (Auckland Council, Nelson City Council, Gisborne, Tasman, and Marlborough District Councils) perform the functions of a regional council and therefore can be expected to have higher rates than other territorial authorities.

Were councils consulted in the process?

Yes. Every council was sent a draft version of their respective page to review.

Can the results of the 2019 report be compared to the 2018 edition?

This year, for non-rates figures (i.e. liabilities, staff) we have assessed council data using Stats NZ’s 2018 household estimates, with some councils opting to replace this estimate with an exact figure. We have done this because councils have different definitions of what constitutes a residential ratepayer or ‘rating unit’.

The updated methodology means that (aside from the average rates metric which remains unchanged) the per-household figures should not be compared to the per-ratepayer figures in last year’s report. Nevertheless, we can provide the comparable time-series data for individual councils on request.

CRUSTACEAN CONTROVERSY: Council spends $6,000 on man in crayfish suit

After putting some feelers out, the New Zealand Taxpayers’ Union can reveal that Wellington regional ratepayers have paid almost $6,000 for “Frank the Crayfish”, a man in an elaborate crayfish suit who scolds ratepayers for their environmental habits.
 
Frank stars in Greater Wellington Regional Council’s ‘quirky’ environmental ads, currently warning against burning treated wood. The crayfish suit itself set ratepayers back $3,465, plus $2,500 for the actor.
 
For comparison, the work attire for Taxpayers’ Union mascot Porky the Waste-hatercost just USD100 on Alibaba.
 
Including video production and advertising, the full campaign has cost ratepayers $26,302 so far. Once another two more ad campaigns are completed, the Union estimates Frank will have set ratepayers back by around $67,000.
 
In its official information response to the Union, the Council says that a grown man in an “elaborate” crayfish costume adds “some humour” to serious environmental issues.
 
A crayfish was chosen as mascotbecause crayfish are “sensitive to water quality changes”. It is unclear how this relates to wood burning. The name Frank was chosen in service of the tagline, “Let’s have a frank conversation.” Campaign ads warn against making Frank “cray cray”.
 
The Council also confirmed that it is not sharing campaign costs with any other regional councils, missing an obvious opportunity to save ratepayer money.

This is yet another example of a council trying to emulate corporate gimmickry. Unlike corporate advertisers who need to stand out from competitors, the Council is a monopoly service provider. It could have settled for a cheap, no-frills and less confusing marketing campaign.

For the ratepayers who worked hard for that money, this spending is rock bottom stuff.

Frank the Creyfish

Frank

The Council's responses to our official information requests are available below.

Response_letter_to_Jordan_Williams_NZ_Taxpayers_Union_OIA_2019-257.pdf

Response_letter_to_Luke_Redwood_(New_Zealand_Taxpayer’s_Union)_OIA_2019-264.pdf

Op-ed: KiwiBuild reset plan ominously similar to 2008 American housing chaos

JoeThe following op-ed is written by Taxpayers' Union Economist Joe Ascroft.

On Wednesday, the Government finally announced its KiwiBuild reset. The target of 100,000 homes over ten years has been scrapped and replaced in part by a $400 million “Progressive Homeownership Scheme”, which would distribute additional deposit subsidies for first-home buyers and – subject to some conditions – allow first-home buyers to access government-backed mortgages with just five percent deposits.

The scheme is essentially an expansion of the National Government’s “Welcome Home Loan” policy, which backed mortgages for low-income households albeit with higher deposits and lower subsidies.

The scheme has good intentions. The Government is rightly concerned that many families are locked out of the housing market. However, the details of the scheme are deeply worrying.

First, the plan does nothing to address housing supply. Unless the Government introduces regulatory reform to make housing construction easier and cheaper, introducing additional subsidies and government-backed credit will simply be capitalised into house prices. Unless the underlying factor driving housing unaffordability is solved (not enough houses) the real winners will be existing home owners who will receive a capital gain.

Secondly, the scheme is hugely risky for taxpayers. The policy is specifically targeted at families who are struggling to save for a deposit due to – in Green Party co-leader Marama Davidson’s words – “high rents and low wages”. In other words, these are financially precarious households, who struggle to save and invest.

Granting those families low-deposit mortgages will not increase their incomes or change their savings behaviour. With very little savings or equity, their ability to meet mortgage repayments in the event of a recession or a substantial increase in interest rates is likely to be very poor – just as we saw in the United States in the mid-to-late 2000s, when NINJA (no income, no job or assets) home-owners defaulted on their mortgages at spectacular rates when interest rates climbed.

Worryingly for taxpayers, the Government has agreed to back these mortgages. In short, in the event of defaults any difference between the outstanding value of the mortgage and any capital recovered from a mortgagee sale would be met by taxpayers. In an environment of steadily climbing house prices, any risk to the Crown balance sheet might seem remote, but that can change quickly.

When mortgage defaults climbed in the United States, house prices began to fall and banks were unable to recover their losses. Government-backed lenders Fannie Mae and Freddie Mac, which targeted low-income borrowers in an eerily similar fashion to plans announced on Wednesday, fell over leaving taxpayers to pick up the pieces. The cost of the Fannie Mae and Freddie Mac bailout was $191 billion USD.

Simply, if the answer is subsidised, low-deposit government-backed mortgages for families with low incomes and very few assets, you have asked the wrong question.

The solution to easing the burden of high rental costs on low-income families is to radically reform building regulations and make densification significantly easier. That will involve making politically difficult decisions about the Resource Management Act and other planning laws. Crucially though, it will work and it won’t impose significant financial risks on taxpayers.

Revealed: Taxpayers shell out $15,000 for left-wing lobby group

ActionStation logo

The Government has used taxpayer money to hire its left-wing mates as the Friendship Police, reveals the New Zealand Taxpayers’ Union. 

In May 2019, Netsafe granted $15,000 in taxpayer funding to left-wing campaign group ActionStation, according to information obtained under the Official Information Act.

The payment breaches Netsafe’s commitment not to fund political organisations with Ministry of Justice money.

This is the same group that helps out Labour and the Greens during election campaigns. The cushy contract makes a lie of ActionStation’s claimed independence from government funding.

Taxpayers are unknowingly supporting ActionStation to tell New Zealanders how to have “better, safer and more productive conversations online around Māori, refugees, NZ history and Tiriti”. But the Government shouldn’t be boosting the bottom line of any political lobby group.

People on the left would rightfully be outraged if a National government contracted the Maxim Institute to teach sex-ed in schools, or the New Zealand Initiative to draft the Budget. In principle, this cosy payment to ActionStation is no different.

The Taxpayers’ Union is calling on ActionStation to refund the payment, and front up about any other taxpayer funding it receives or has applied for.

Zero Carbon Bill Submission

Joe at committee

Earlier today our economist Joe Ascroft submitted in person to the Environment Select Committee on the Zero Carbon Bill. 

The Bill sets out expectations for reducing New Zealand's emissions profile as part of a global effort to limit climate change. 

Joe spoke to our written submission, which is available here

Our key contentions to the Committee were that:

1. The economic effects of taxing and limiting emissions are often underplayed by climate activists. NZIER forecasts that real GDP could be between $10.2 and $49 billion smaller by 2050 if we adopt a split-gas approach compared to current emissions targets. Compared to taking no action at all, GDP could be up to 22 percent smaller by 2050.

2. The Ministry for the Environment argues that the economic modelling fails to take into account the impact of climate change on the New Zealand economy, but that critique misses that New Zealand's impact on climate change is likely to be very small. 

3. The poorest households are likely to be disproportionately hurt by any intervention. NZIER modelling indicates the poorest 40 percent are likely to experience six times the harm of the richest 20 percent. 

4. Aggressively targeting our agricultural sector could simply cause production to shift overseas - with no subsequent net impact on global emissions.

Revealed: Adverse drug reactions cost taxpayers quarter of a billion

Pill graphicBetween 2015/16 and 2017/18, DHBs spent $280 million treating patients due to adverse drug reactions, reveals the New Zealand Taxpayers’ Union in its final health productivity briefing paper.

It’s seriously concerning that taxpayers spent $280 million in three years dealing with botched prescriptions and incorrect use of medication. That’s the equivalent of 10 flag referendums, or $150 per household. DHBs need more discipline in setting and meeting targets to ensure drugs are correctly prescribed and patients understand how and when their prescriptions.

This problem needs to be addressed not just for the sake of patients, but for taxpayers who are forecast to be absolutely hammered by rising demands on healthcare services.

Some DHBs are much worse than others. Canterbury DHB alone spent $60 million treating those with adverse drug reactions across the three year period. Waikato DHB spent nearly $40 million.

There needs to be further investigation at Counties-Manakau DHB over treatment related to adverse drug reactions. Their reported rate of treatment and total spend related to adverse drug reactions is much lower than you would expect for a DHB treating such a large population. If their reported data is correct, they are performing extremely well, but they may also not be correctly recording treatment data.

The information was obtained under the Official Information Act and has been released as part of a serious of briefing papers, linked here.

Advice on clean car scheme is seriously flawed – policy must be put on hold

In a submission to the Ministry of Transport, the Taxpayers’ Union reveals that the cost-benefit analysis prepared by Ministry of Transport and used to advise Ministers on the Government’s Clean Car Standard and ‘Feebate’ policies has serious flaws which undermine justifications for the policies.

More than 90 percent of the Ministry’s estimated benefit is attributable to consumer fuel savings, but even in their most conservative assumptions they incorrectly pegged before-tax fuel prices at 40 to 50 cents per litre more expensive than in reality. This was due to their reliance on 2011/2012 price projections from MBIE which have failed to bear out. In short, they got the price of fuel totally wrong – using previous forecasts, instead of current reality. As a result, the proposed savings calculations do not reflect reality.

But that’s not the only mistake.  Even if you ignore the fuel price assumption errors, the Ministry simply assumes consumers are irrational and that the Government needs to intervene to rectify this issue – with no evidence or literature cited to reflect this position.

When preparing the Union’s submission on the clean car policies, we readily found plenty of evidence that consumers do in fact understand the benefits of fuel efficient cars – but none of this evidence is addressed by Ministry officials in their analysis. That’s potentially fatal for the Ministry’s analysis – if almost all the benefits from buying EVs flow through to consumers from fuel savings and consumers understand the value of these savings, there’s no good reason for the Government to intervene.

Finally, officials need to reconsider how they perform cost-benefit analysis. The infamous BERL alcohol paper has become a joke within economic circles in part because they counted all of the costs from alcohol, without taking into account benefits to consumers, like enjoyment. The analysis from Transport similarly counts all of the costs from driving a car which is less efficient than an EV or a Prius, but ignores the benefits to consumers which lead them to make that choice. Consider, for example, a ban on ice cream sales. It would be bizarre to count reduced consumer spending on ice cream as a ‘benefit’ without acknowledging the lost benefits to consumers from ice cream consumption.

The Government’s Clean Car Discount and Standard policies should not proceed until Ministry of Transport officials fix the analysis Ministers relied upon to set the policies.

Full submission:

Email correspondence with the Ministry of Transport: 


Revealed: $20 million of redundancy payments dragging down health sector

GraphicIn a new briefing paper, the New Zealand Taxpayers’ Union can reveal that in the period 2013/14 through 2017/18, DHBs spent $20.37 million on redundancy payments.

Some redundancy payments are inevitable, but spending an average of $26,800 on 758 payments is a poor use of money. DHBs should be prioritising patient care and services, not golden handshakes to staff who are being let go.

Huge variance in the size of payments between DHBs should ring alarm bells. Waikato DHB, which has since had its board sacked, had the highest average redundancy payment of $47,800. In contrast, while South Canterbury DHB made more than 100 payments in five years, the average payment was only just over $10,000.

There’s no right way to manage redundancy payments – sometimes letting staff go is the efficient option – but DHBs should be careful to keep their average payments low so funding is going to patient care.

This information, obtained under the Official Information Act, has been released as the second of three briefing papers on healthcare productivity. The first briefing paper can be viewed here, along with the introductory report, Productivity in the Health Sector: Issues and Pressures.

The face that haunts Porirua ratepayers

FaceThe New Zealand Taxpayers’ Union is questioning the value of a $98,876 brand makeover at Porirua City Council. 

The official new avatar for the Council, which you would expect to be emblematic of the rebrand’s quality, is a limp and childlike smiley face. The design was apparently chosen because it ‘connects with the city’s youthful population’. When Porirua ratepayers gaze long enough into the face, the Council’s five percent annual rate hikes gaze back.

Councils do not need to engage in corporate branding exercises. Unlike businesses, councils are monopoly service providers and do not need to market themselves to their ratepayers, who are already a captive audience.

Porirua isn’t the only council to have indulged in an expensive rebrand, but this is no excuse. In our experience, branding exercises are driven by political egos and only serve to distract from inadequate services or rising pressure on ratepayers.

$25,000 was spent on photography alone for this rebrand, according to a response obtained under the Local Government Official Information and Meetings Act.

Revealed: Missed specialist appointments cost taxpayers $29 million

Graphic

The New Zealand Taxpayers’ Union is asking DHBs to charge patients who miss specialist appointments, in light of new figures that show missed specialist appointments cost taxpayers $29 million in FY 2016/17.

District Health Boards need to become more efficient if we expect to keep healthcare costs manageable in response to an aging population. Tackling the $29 million annual spend on missed specialist appointments would be one way to meet that goal.

Some DHBs are worse than others: Counties Manakau, Waikato, Lakes District and Auckland each have missed specialist appointment rates above 10 percent. In contrast, South Canterbury DHB has an admirable 2.5 percent missed appointment rate.

DHBs need to work harder to reduce rates of missed specialist appointments. When patients miss an appointment, they contribute to a clogged health system and impose higher costs on taxpayers – in part contributing to the accelerating health costs demonstrated in our recent report Productivity In The Health Sector: Issues And Pressures.

Figures for DHBs across the country were obtained under the Official Information Act and have been released by the Union in a new briefing paper, the first in a series of three papers on healthcare productivity. The Union can provide raw figures for interested media.

The briefing paper makes three suggestions for DHBs:

  1. DHBs should charge patients who miss their specialist appointments.
  2. Those DHBs that do not measure (or report on the cost of) missed specialist appointments should do so.
  3. DHBs should be more active in reminding people of appointments to reduce the number that are missed.


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