Thanks Craig! I don’t understand why you seem to frame this as a genuine but misguided attempt on the part of conservative governments to actually solve the problem of local government funding rather than a deliberate attempt to enforce privatisation. Is that not as obvious as it sounds to me?
Collectively all our local governments, via their participation in the Local Government Funding Agency, special debt vehicle, are all debt zombies, with collective liabilities beyond the productive capacity of them all, even as a whole.
To cap rates now is going to mean only one of two things:
1 More borrowing to cover the shortfall, until bankruptcy receivership, hand over your assets.
2 Hand over your assets straight away.
That is the central government does not evoke economic crisis measures and use our Sovereign credit powers to break the impasse, as I argue we would be justified in doing.
What this disgusting government does not do with its 'back to basics' blather about local government is tell us what the actual purpose of local government is if it isn't to provide collective local services and facilities so our lives can be better.
If you are not familiar with the concept of Sovereign Credit, please read the conversation below in the book by famous New Zealand trade unionist Tom Skinner and a famous politician, Michael Joseph Savage:
Man to Man by Tom Skinner 1981 – Michael Savage explained the State housing scheme to Tom Skinner of the (New Zealand) Federation of Labour as such;
Pg 45 – “I was with Joe on one occasion when he began chatting about the ramifications of the Governments State Housing Scheme. He told me … how the construction of those houses created assets in a productive way. The Government created the money through the Reserve Bank at a moderate rate of interest to cover the contract price, which paid for materials, tradesmen’s wages, the purchase and development of the land and all the other essentials required to finish the house. On completion the house was transferred from the Housing Division of the public works department to the State Advances Corporation – in effect from one department to another. The corporation was the renting agency responsible for selecting the tenants, collecting rents and maintaining the house and the property.
The philosophy was that as the money was created for productive purposes no loss could occur if it were not repaid from one department to another. Meanwhile, during construction, tradesmen had been paid wages which had been spent and absorbed into the economy. But it was solid money backed by the creation of assets. People had been kept fully employed while the government built homes for the people.
Tom Skinner;
“While Joe spoke I began suddenly to grasp the Labour philosophy related to the creation of credit. It set me off thinking about money and what it meant to the economy. The Government, figuratively speaking, could rub a state house debt out of the books because a building stood in its place. But money created by the banks in order to gain profits in the form of interest was the other side of the coin. It was unproductive, inflationary creation of money if unmatched by equivalent goods and services…..”
“I have read and believe that monetary mismanagement is the greatest evil of our time. It breeds injustice, increased costs and, as the root cause of inflation, it diminishes the value of our money. Governments should carry out their pre-election promises and take the necessary steps to reform the monetary system. It can be done only by making the State the sole authority for the issue of currency and credit….. unfortunately, in this area politicians seem to be abysmally ignorant of elementary financial and economic truths.”
More on the New Zealand Labour Party history of advocating for using our Sovereign Credit Powers, which I argue we need to invoke today more now than ever, here:
C? You’re feeling generous James! If I were marking Luxon’s strategic capabilities, I’d give him a generous D. Generous because it is for handing in the work on time and hitting a few buzzwords. And that’s grading on a first-year strategy assessment marking rubric.
🤔 Part of the problem is that the justifications for limiting local Council spending SOUND so reasonable to those who don't really think about it, or take the trouble to learn (history as you outline being an example). Of course no-one wants to pay MORE, and some people think that if they personally don't use some service then they shouldn't have to contribute to it 🤷 And "infrastructure" sounds so far removed from everyday household concerns - until you have major EQs like Christchurch & realise that munted roads & stormwater pipes & sewage systems are REALLY REALLY inconvenient & dangerous even 😱
Thanks for having these conversations to help equip some of us with facts & discussion points with upcoming local body elections no doubt having the "stop all rates increases" candidates bursting out of the woodwork ⁉️
How do I download this so that I can copy it to every person standing for my two local Councils (District and Regional)? Might give them real food for thought ….
I visited family there recently, and it was so depressing to see the impact of prolonged caps.
- poor road maintenance that would make my community implode with righteous indignation;
- worse vegetation management (weeds in the kerbs and shrubs are not the same as roadside biodiversity reserves..);
- old park assets being removed rather than replaced, particularly at playgrounds;
- key local tourism events canned for lack of funding (e.g. annual airshow);
- town centre effectively dead, major chains all moved to shinier suburban malls;
- sewerage outflow into the river, treated but stinking of detergent, with clearly visible downstream impacts;
- severe burn out and poor conditions for teachers, social workers, and aged care staff, much less their "clients".
In terms of alternative revenue:
- hospitality and council fighting over who should be allowed to benefit from a bed tax;
- a plethora of speed cameras, whose fines go into a central govt pot rather than council or police;
- govt grants for additional services like social services and education (which UK councils did manage in the past), slashed or transferred to private and non-profit providers, e.g. schools --> academies.
There was also clear "othering" in residents' conversations about who gets or deserves what, particularly regarding more wealthy areas (no weeds) and illegal immigrants (not permitted to work while being processed, but must be housed and fed).
Weirdly, the amalgamation effect has led to my home town (Bournemouth).now being part of a combo with neighbours Poole and Christchurch (--> "BCP Council"), which makes sense apart from the failure to reduce the number of councillors. There are over 70!! How does that even work?? The interrelationship between parties, positions, portfolios, pay, and power is almost ludicrous - would have loved some time to learn more, but it might have sent me into more depression and confusion..
It is such a clear potted history that I see through the lens of this article that NZ Inc is recreating in the United Kingdoms likeness. You're tone is very measured and the echo chamber within which you sit unfortunately gets disproportionately small public voice. Free speech as spoke by this government silences all dissenters. Sorry dispondence descends
Craig, while I agee with all you say about what happened in the UK in the 1980s, you missed one fundamental. The Falklands War.
An opportunist Argentinian dictator seriously mistimed his adventure into the nearby islands that Britain (at the time) didn't know what to do with. In fact they were talking nicely about some sort of arrangement. Meanwhile, the incumbent unpopular Tory government were laying waste in all directions - including the military. The Royal Navy had two aircraft carriers - one that it had already sold to Austalia but were still using, and the other that was scheduled for scrapping. If Generalissimo Galtieri had held off for six weeks the Brits would not have had the capacity for aerial support for the recapturing forces. In fact HMS Hermes, was en route up the Solent on its last run before decomissioning when the order was given to stand by for action.
We all know what eventually happened, but the gung ho, ra ra, behaviour was excruciating, and Thatcher played on it to win her subsequent snap election. I couldn't wait to get out...
Thanks Craig! I don’t understand why you seem to frame this as a genuine but misguided attempt on the part of conservative governments to actually solve the problem of local government funding rather than a deliberate attempt to enforce privatisation. Is that not as obvious as it sounds to me?
Collectively all our local governments, via their participation in the Local Government Funding Agency, special debt vehicle, are all debt zombies, with collective liabilities beyond the productive capacity of them all, even as a whole.
To cap rates now is going to mean only one of two things:
1 More borrowing to cover the shortfall, until bankruptcy receivership, hand over your assets.
2 Hand over your assets straight away.
That is the central government does not evoke economic crisis measures and use our Sovereign credit powers to break the impasse, as I argue we would be justified in doing.
What this disgusting government does not do with its 'back to basics' blather about local government is tell us what the actual purpose of local government is if it isn't to provide collective local services and facilities so our lives can be better.
Hi @craigrenney,
If you are not familiar with the concept of Sovereign Credit, please read the conversation below in the book by famous New Zealand trade unionist Tom Skinner and a famous politician, Michael Joseph Savage:
Man to Man by Tom Skinner 1981 – Michael Savage explained the State housing scheme to Tom Skinner of the (New Zealand) Federation of Labour as such;
Pg 45 – “I was with Joe on one occasion when he began chatting about the ramifications of the Governments State Housing Scheme. He told me … how the construction of those houses created assets in a productive way. The Government created the money through the Reserve Bank at a moderate rate of interest to cover the contract price, which paid for materials, tradesmen’s wages, the purchase and development of the land and all the other essentials required to finish the house. On completion the house was transferred from the Housing Division of the public works department to the State Advances Corporation – in effect from one department to another. The corporation was the renting agency responsible for selecting the tenants, collecting rents and maintaining the house and the property.
The philosophy was that as the money was created for productive purposes no loss could occur if it were not repaid from one department to another. Meanwhile, during construction, tradesmen had been paid wages which had been spent and absorbed into the economy. But it was solid money backed by the creation of assets. People had been kept fully employed while the government built homes for the people.
Tom Skinner;
“While Joe spoke I began suddenly to grasp the Labour philosophy related to the creation of credit. It set me off thinking about money and what it meant to the economy. The Government, figuratively speaking, could rub a state house debt out of the books because a building stood in its place. But money created by the banks in order to gain profits in the form of interest was the other side of the coin. It was unproductive, inflationary creation of money if unmatched by equivalent goods and services…..”
“I have read and believe that monetary mismanagement is the greatest evil of our time. It breeds injustice, increased costs and, as the root cause of inflation, it diminishes the value of our money. Governments should carry out their pre-election promises and take the necessary steps to reform the monetary system. It can be done only by making the State the sole authority for the issue of currency and credit….. unfortunately, in this area politicians seem to be abysmally ignorant of elementary financial and economic truths.”
More on the New Zealand Labour Party history of advocating for using our Sovereign Credit Powers, which I argue we need to invoke today more now than ever, here:
https://publiccreditorbust.blogspot.com/2015/06/new-zealand-labour-party-money-system.html
This is how it should be.
This. Why is it not discussed widely and taught in schools?
And the brilliance of Luxon’s ‘C’ list strategic ability breaks cover again.
You’re so right Paul. What was I thinking? 🤔
C? You’re feeling generous James! If I were marking Luxon’s strategic capabilities, I’d give him a generous D. Generous because it is for handing in the work on time and hitting a few buzzwords. And that’s grading on a first-year strategy assessment marking rubric.
🤔 Part of the problem is that the justifications for limiting local Council spending SOUND so reasonable to those who don't really think about it, or take the trouble to learn (history as you outline being an example). Of course no-one wants to pay MORE, and some people think that if they personally don't use some service then they shouldn't have to contribute to it 🤷 And "infrastructure" sounds so far removed from everyday household concerns - until you have major EQs like Christchurch & realise that munted roads & stormwater pipes & sewage systems are REALLY REALLY inconvenient & dangerous even 😱
Thanks for having these conversations to help equip some of us with facts & discussion points with upcoming local body elections no doubt having the "stop all rates increases" candidates bursting out of the woodwork ⁉️
How do I download this so that I can copy it to every person standing for my two local Councils (District and Regional)? Might give them real food for thought ….
Here's a good article about the state of local govt and rating caps in the UK today:
https://www.bbc.com/news/articles/c04e0vey9w6o
I visited family there recently, and it was so depressing to see the impact of prolonged caps.
- poor road maintenance that would make my community implode with righteous indignation;
- worse vegetation management (weeds in the kerbs and shrubs are not the same as roadside biodiversity reserves..);
- old park assets being removed rather than replaced, particularly at playgrounds;
- key local tourism events canned for lack of funding (e.g. annual airshow);
- town centre effectively dead, major chains all moved to shinier suburban malls;
- sewerage outflow into the river, treated but stinking of detergent, with clearly visible downstream impacts;
- severe burn out and poor conditions for teachers, social workers, and aged care staff, much less their "clients".
In terms of alternative revenue:
- hospitality and council fighting over who should be allowed to benefit from a bed tax;
- a plethora of speed cameras, whose fines go into a central govt pot rather than council or police;
- govt grants for additional services like social services and education (which UK councils did manage in the past), slashed or transferred to private and non-profit providers, e.g. schools --> academies.
There was also clear "othering" in residents' conversations about who gets or deserves what, particularly regarding more wealthy areas (no weeds) and illegal immigrants (not permitted to work while being processed, but must be housed and fed).
Weirdly, the amalgamation effect has led to my home town (Bournemouth).now being part of a combo with neighbours Poole and Christchurch (--> "BCP Council"), which makes sense apart from the failure to reduce the number of councillors. There are over 70!! How does that even work?? The interrelationship between parties, positions, portfolios, pay, and power is almost ludicrous - would have loved some time to learn more, but it might have sent me into more depression and confusion..
Excellent post Craig.
It is such a clear potted history that I see through the lens of this article that NZ Inc is recreating in the United Kingdoms likeness. You're tone is very measured and the echo chamber within which you sit unfortunately gets disproportionately small public voice. Free speech as spoke by this government silences all dissenters. Sorry dispondence descends
Craig, while I agee with all you say about what happened in the UK in the 1980s, you missed one fundamental. The Falklands War.
An opportunist Argentinian dictator seriously mistimed his adventure into the nearby islands that Britain (at the time) didn't know what to do with. In fact they were talking nicely about some sort of arrangement. Meanwhile, the incumbent unpopular Tory government were laying waste in all directions - including the military. The Royal Navy had two aircraft carriers - one that it had already sold to Austalia but were still using, and the other that was scheduled for scrapping. If Generalissimo Galtieri had held off for six weeks the Brits would not have had the capacity for aerial support for the recapturing forces. In fact HMS Hermes, was en route up the Solent on its last run before decomissioning when the order was given to stand by for action.
We all know what eventually happened, but the gung ho, ra ra, behaviour was excruciating, and Thatcher played on it to win her subsequent snap election. I couldn't wait to get out...
Bring the poll tax back. Then we’ll see if people think Council services are worth it.