Steve Baron: Ratepayer Democracy: Why Binding Referendums Could Save Local Government from Itself

Last month, when people opened their rates bill, some found a 12% increase staring back at them. Like most Kiwis, they swore under their breath, then did what we always do—grumbled to the neighbours and paid up. But here’s the thing that really gets me: somewhere in a council chamber, a group of elected representatives I probably couldn’t pick out of a lineup decided I needed to fork out hundreds more dollars for projects I may never have supported. And there wasn’t a bloody thing I could do about it.

That’s about to change, if the Local Government Business Forum gets its way. Their proposal for binding referendums on major council spending—anything exceeding $500 per ratepayer—isn’t just another policy idea. It’s a democratic revolution waiting to happen at the local level.

The Democratic Deficit That’s Bankrupting Us

Here’s the uncomfortable truth about local government: it’s become a playground for pet projects funded by people who have no say in the matter. We elect councillors every three years, then they disappear into committee rooms where they make spending decisions that would make a sailor blush. The Tauranga Museum referendum is a perfect case study. Ratepayers overwhelmingly voted against the $52 million project, yet the council ploughed ahead anyway. Why? Because the referendum was non-binding, essentially a very expensive opinion poll.

This isn’t democracy; it’s taxation without representation with a Kiwi accent.

I’ve sat through enough council meetings to know how these decisions get made. Councillors get swept up in grand visions of transforming their communities, usually egged on by consultants who profit from complexity and staff who won’t be around to face the ratepayers in 20 years when the bills come due. Meanwhile, the people paying—you and me—get a rates bill and a promise that it’s all for our own good.

The numbers tell the story. Rates increased in one jurisdiction by 12% last year, with another 9% forecast for this year. That’s not inflation—that’s a spending addiction enabled by a democratic system that’s lost its way.

Learning from the Swiss (Again)

Before you dismiss binding referendums as some radical experiment, consider Switzerland. Their cantonal system requires voter approval for major public expenditure, and the results speak for themselves. Swiss local governments are amongst the most fiscally responsible in the world, not because they’re stingy, but because they have to justify every major expense to the people who pay for it.

I remember discussing this with a colleague from Switzerland a few years back. He was genuinely puzzled by our system. “You mean your councils can just decide to spend your money without asking you?” he asked. When I explained our rate system, he shook his head. “That’s not democracy, mate. That’s feudalism with voting.”

He wasn’t wrong. The Swiss model forces councils to build genuine consensus around major projects. If you can’t convince a majority of ratepayers that your museum, sports complex, or conference centre is worth their hard-earned money, maybe it’s not such a brilliant idea after all.

Drawing the Line Where It Matters

The Local Government Business Forum’s proposal isn’t anti-development—it’s pro-accountability. Crucially, they’ve drawn a sensible distinction between essential infrastructure and discretionary facilities. Nobody’s suggesting we vote on every water pipe replacement or road repair. These are the unglamorous basics that keep our communities functioning.

But museums, sports stadiums, conference centres, and elaborate civic buildings? These are choices, not necessities. And choices should belong to the people footing the bill.

This distinction matters because it addresses the legitimate concern that referendums could paralyse essential services. Water infrastructure, waste management, and basic roading don’t need ratepayer approval—they need competent management. It’s the shiny add-ons that should face the democratic test.

The Third Way Forward

We’re facing a false choice in local government finance. On one side, we have councils spending with impunity, treating ratepayers like an ATM with legs. On the other hand, we have calls for central government rate capping, which would strip local autonomy and create its own problems.

Binding referendums offer a democratic third way. They preserve local decision-making while ensuring ratepayers have a real say in how their money is spent. They force councils to engage with their communities before committing to major expenditure, not after the contracts are signed.

From my years in the advertising industry, I learned a fundamental truth: if you can’t sell your idea to the people paying for it, your idea probably isn’t as good as you think it is. The same principle applies to local government. If a council can’t convince ratepayers that a $50 million museum or sports complex is worth the cost, perhaps they should go back to the drawing board.

The Reality Check We Need

Critics will argue that ratepayers aren’t qualified to make complex infrastructure decisions. That’s patronising nonsense. The same people who run businesses, manage households, and make countless financial decisions every day are somehow too simple to understand whether their community needs another cultural facility.

Binding referendums wouldn’t eliminate council expertise—they’d harness it. Councils would still develop proposals, conduct feasibility studies, and present options. The difference is they’d have to convince the community, not just each other.

This accountability would improve decision-making across the board. Knowing that ratepayers have the final say would force councils to be more rigorous in their analysis, more honest about costs, and more creative about funding alternatives.

The Local Government Business Forum has handed us a solution that respects both fiscal responsibility and democratic participation. It’s time we stopped treating ratepayers as a piggy bank and started treating them as partners in building our communities.

Ratepayer Democracy

The question isn’t whether we can afford binding referendums. It’s whether we can afford not to have them.

Steve Baron is a New Zealand-based political commentator and author. He holds a BA with a double major in Economics and Political Science from the University of Waikato and an Honours Degree in Political Science from Victoria University of Wellington. A former businessman in the advertising industry, he founded the political lobby group Better Democracy NZ. https://stevebaron.co.nz