Monday, August 26, 2013

Dismal mayoral politics

Last week saw the first round in the mayoral debates that will take place in Auckland over what is likely to seem an interminable next few months. Radio New Zealand's report on the debate hosted by Grey Power in Pakuranga made for dismal listening. Which is not surprising since talking to Grey Power always seems to bring out the worst in political candidates.

Also not surprising was the fact that most of the discussion seemed to centre around rates. No one much likes paying rates and the elderly wealthy seem to like it the least. Accordingly, promises to limit rate increases were well received with businessman John (I know what I'm talking about because I'm rich) Palino scoring an early hit. So what did the candidates say that made for such depressing listening?

It's a sad fact that if candidates want to swing voters their way, one sure-fire way of doing this is to promise to not spend money on stuff that is of no direct benefit to the audience. Palino did just this, promising the proposed white water rafting course at Manukau would be canned if he was the mayor. Cue much applause from the non-white water rafting elderly. Palino's is a true Republican Party-style hip pocket campaign, with promises to limit rate rises to the rate of inflation and cut the Council payroll by 5%. But wait, there's more! Palino is also promising a new CBD in Manukau! Quite how the Council will pay for this with constrained rates income or do the work with what is an already stretched workforce is a bit of a mystery but, you know, rich guys Just Get Stuff Done. Or not. 

Homeless in California
What someone really needs to ask Mr Palino, since most of his policies (as far as we can make out) have already been implemented in some US states, is how that's working out for them? Perhaps ask these folk in California (left), or people who lost their homes in last year's Colorado wildfires.

Also present, and showing a politician's ability to tell an audience what they want to hear, was current mayor Len Brown. He claimed we needed to have 'a genuine debate' about whether local government was funded off 'an income-based system' or property value-based system because the current system was not much good 'for you guys in particular'. Great news for the elderly sitting on valuable properties but not wanting to contribute anything to younger residents. Len needs to be careful about where he heads with that one given that most of his voting base is on low incomes, and the Council has no idea who is living where in South Auckland.

The 2007 Shand report on rates found income-based rates systems were more equitable, but also that there is a high correlation between property value and household income, and "the Panel considers that rates-based funding of local government is not inherently inequitable." I'd almost buy the income-is-more-equitable-than-property-value argument if the market was providing more affordable housing, thus keeping house prices lower overall, and if property investors couldn't use property tax losses to avoid paying their fair share. Would an income-based system mean the rest of us subsidise them even more than we already do?  At least property-based rates captures property owners regardless of tax status.  

The Reverend Unasa also promised cuts, starting with the Mayor's office, and a look at the number of consultants used by the Council. The problem with this is that consultants are doing work the Council might otherwise have to employ actual human beings to do. If the work needs to be done but there are going to be 'cuts' and a limit on the hiring of consultants, then what actually gets done? Not facilities maintenance down at the Manukau Sports bowl, that's for sure. 

The deeper issue sitting under all this 'no rates rises for the elderly' is the extent to which elderly residents sitting on ever more valuable properties should be shielded from having to contribute to the wider social good, or having to pay a levy on the increased value of their properties: properties they undoubtedly obtained in a time of full employment, free university study and (often) subsidised government mortgages. Because at some point the polity, whether through central or local government, is going to decide to tax those rising property values through a capital gains or other property tax, means testing of services for the elderly or some other mechanism. Grey Power might not like it, but a property value-based rating system at least makes it look like the elderly and their accumulated wealth are contributing something to society at a time when their grandchildren are struggling to purchase even a modestly priced Auckland home.

The Radio NZ report noted a high approval rating among the audience for John Palino. Grey Power (and the rest of us) need to be very careful what they wish for.