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Tuesday
Aug292017

Taxpayers' Union "League Tables" Revisited 

Last Wednesday, I sent the following enquiry to Communications Manager Laurna White:

"I realise that there are a number of anomalies within these figures, and that they should not be taken literally, but they are nevertheless an indication.

There are some specific anomalies within the TCDC figures that I hope can be explained without me actually drawing attention to them.

Could you please ask Steve and his team if they could explain some of the more obvious of these?

In particular, could they please explain why when many of our costs are well below average (for provincial councils)  why are rates comparatively high?

Is there a simple explanation to this, or has the Union simply got it wrong?

Hope this is not too much of a request."

Today I received the following response:

"In regards to your queries about the Taxpayers Union report, the report relies heavily on publicly available information drawn from council annual reports and official information requests. No information, however, is provided on the different circumstances in which councils operate.

In our case, our rates average was $2,481 based on the Statistics New Zealand return. In an email in early July we pointed out to the Taxpayers Union that 50%+ of our property owners do not reside within the District. They own holiday homes here. Our Council is geared to support a population of up to 120,000 residing in our District over the summer period. This is in excess of four times the number that the Taxpayers Union used in their statistical analysis.

We also indicated in the email that the finance costs in the Taxpayers Union Report indicates that the average $114 they arrived at -  by taking finance costs from our 2016 Annual Report $2.642M and dividing by 23,182 residential ratepayers - was flawed as it took our total finance bill but divided it by a subset of our ratepayer base. This is an extremely misleading number. The same applies to our revenue and personnel costs and total operating costs.

We also suggested to the Union that placing these figures in league tables and reporting publicly the results would be extremely misleading without the appropriate disclaimer on the measures for all Councils with high proportions of non-resident property owners. They decided not to do this.

Another influencing factor is that our residential properties form the majority of our rating base, whereas councils like Hamilton, Auckland and Hauraki have a large commercial or non-residential base."

Here are extracts from a is a PR put out today by the Local Government Association: (I have deleted stuff that I considered irrelevant - go here to read the entire document!)

"Taxpayers’ Union doesn’t trust ratepayers with the truth -

It’s hard to tell if the Taxpayers’ Union is again being deliberately obtuse in its latest analysis of council finances or if it’s plunging to a new low by misinterpreting data to make unfair comparisons of their financial performance.  This week it released already publicly-available data on local councils in what it calls a “Ratepayers’ Report”.

The organisation got its first attempt at this data fundamentally incorrect in 2014.  While this year’s attempt is an improvement on the past the effort nonetheless still falls short of being useful.  For example, the report divides performance factors by the wrong number or type of ratepayers, and the accompanying media releases criticise performance without providing even a tiny degree of context.

The Taxpayers’ Union’s analysis is as about as accurate as judging the fairness of car prices without knowing whether they’re electric vehicles, SUVs or Formula One racers.   
Firstly, the basis of comparison is wrong.  Dividing factors such as debt, rates and salaries by what the Taxpayer’s Union calls “residential ratepayers” creates a number of problems.  For a start it ignores the fact that businesses and farmers also pay rates. For example in Central Hawke’s Bay there are less than 8,000 ratepayers however only 25 per cent of these are residential – this grossly inflates the cost per actual ratepayer when we start examining factors such as assets and debt.

New Zealand’s 67 district and city councils are incredibly diverse, spanning Auckland with 1.5 million residents, to Kaikoura with around 3,750.  Each council has different circumstances and has to provide different services based on these.  

But providing useful data and information to ratepayers is important.  This is where we agree with the Taxpayers’ Union.  This is why LGNZ set up an independent assessment programme for local
government.  It’s an excellence programme called CouncilMARK™ which operates in a somewhat similar fashion to the approach used by credit agencies to assess an organisations financial health.
Participating councils will be assessed by independent experts every three years, given an overall rating on a nine point scale from AAA to C, and the results are publicised. 

Unsurprisingly it is a range of factors beyond simple financial metrics.  Councils are placemakers that make communities zing.  Financial performance is important but so are many other things that make life worth living.  The finalised assessments and ratings of member councils are public, placed in context, and constructive – showing where and how an individual council might choose to enhance its value proposition to its community.

There is a democratic process that goes into making those funding decisions every year and a comprehensive long-term planning process every three years.  Ratepayers can also make their judgment on that spending at the ballot box each election.

Dave Cull - President of Local Government New Zealand."

I will simply say this - before the Taxpayers' Union set out to compare the financial performance of Councils, there was nothing - a great big blank sheet that was enhanced neither by auditors' reports, or any other form of independent analysis.

It is no wonder that we welcomed the efforts, faulty and/or lacking context or otherwise, of the Taxpayer's Union to supply this information in league tables by which we could gain some insight into what was going on with our councils. I don't believe that the Union set out in any way to criticise any particular council - it simply presented raw, if faulty data, so Dave Cull's somewhat irascible response is out of order.

I believe that there are still unanswered questions regarding our own Council's performance that required analysis, and I will in due course pose some of those through the OIR system.

In the meantime, readers may care to undertake their own enquiries through these pages, or direct to Council.  I am sure that there will be many who like me, remain dissatisfied with the limited response to date. What is clear is that we as simple town dwellers are held responsible for providing a huge infrastructure and services for visitors from which we as residents derive no benefit, and which is provided without question by our compliant Council on the grounds that "It is great for the tourism industry."

We have on occasion noted with alarm the alacrity with which both staff and elected members appear to regard this as their God-given responsibility to provide. This of course serves to expand the self-importance (and salaries!) of both while we pay the bills The constant reference in the Council response above to the numbers for whom we provide services, as compared to the numbers of ratepayers is adequate evidence of this imbalance.

I for one am very grateful for the manner in which the Taxpayers'  Union has brought this imbalance to our attention, again!We all understand about the danger of accepting 'league tables' without question - that is a given, but the basic anomalies indicated in these figures remain to be fully explained.   

 

 

 

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