Mr Malcolm James Baker,
David Shearer M.P.
Leader New Zealand Labour Party,
Leader of HM Oposition
17th September 2012.
Dear Sir,
The problem
It may be apparent to you that there is a crisis in both the funding for local government, and in teh economy in general. A summery of the problem called be called stagnant, because the economy needs stimulation. In short there is not enough money in circulation, and it is my assessment that this has been caused over the preceeding years by excess money from employment being put into private real estate and housing.
It may be obvious to you if you have tried working for wages as an unskilled orlow skilled labourer that the laws of supply and demant apply, and governments do not mind importing labour on a seasonal or temporary basis to keep wages low. Many jobs do not require highly skilled labour so there is little point in acquiriiing additional skills.
As a house owner I know it costs me $22,000 at the least, to maintain a house, worth $450,000, but working only six months a year it is not possible to earn this much.
Rates are excessive and increase every year, and I believe it should be possible to limit the rates paid to about $1,000 per year on properties worth up to $500.000, and to keep the amount on properties worth more than this to a similar amount to aviod taxing those who are wealthy more than those who are poor, because this is unfair and illegal according to established English case law.
The solution
There is a solution. It is not an immediate one, but it is a simple one. In short, income for local government cannot increase. It would be nice to believe that increasing rates by 5% or 10% every year is an option, but it would force many people on fixed incomes to sell their properties, but would not help them to increase their income, and they would still have to pay rent to live somewhere, and the person owning the rental property would still have to pay rent on the value of the property.
The government (read Minister of Finance) could offer to fund local government by giving loans at 5% or 6%. This means initailly $100,000 would buy a loan of 2 million, or in other words, $100 from the $1,000 rate bill would buy $2,000 of loans. While the loan need never be repaid, it could not realistically drop below 6% interest if the government planned to borrow this from the Bank of England at 4%.
In turn, the Bank of England would be borrowing from its clients at 2% or at most 3%. How many countries and businesseds would be prepared to lend to the bank at this rate? The other problem the Bank of England (which was nationalised, and is owned by the people of England)