New funding options unlikely for NZ councils

Newstalk ZB staff,
Publish Date
Tuesday, 21 July 2015, 4:55PM

Local Government New Zealand looks unlikely to get at least two of its new funding review proposals fast-tracked.

The body wants mandatory rating exemptions removed which would allow councils to charge rates on Government-owned properties.

LISTEN: Local Government Minister Paula Bennett and Auckland Mayor Len Brown speak with Larry Williams

But the Office of Local Government Minister Paula Bennett is ruling that out, citing the public service that some Crown properties, such as schools, provide.

"I'd rather that money was spent on educating those kids than actually going into the hands of the council to kind of think about how they'd spend it somewhere else." 

Local Government New Zealand also wants councils given the power to impose road user charges, targeted levies and fuel taxes. Minister of Transport Simon Bridges appears cool towards the idea.

"Broadly speaking you'd never say never, but ... we've been very clear with local government over a period of time that these sort of funding tools are not our preferred options at all."

Ms Bennett claims we need to call time on what's been a relentless focus on how many mayors we have, or for bureaucrats to decide what local democracy should look like.

"I do think that some councils should amalgamate, but I equally get, and am sick and tired of, the whole debate about who's bigger than who, and how they should do it, and where it should go ... I think we need to concentrate on the stuff that really matters," Ms Bennett said.

"What I would say is that they do need to look at their inefficiencies, they need to look at their staffing numbers, they need to look at how they're delivering some of the core infrastructure that is expected of them and as efficiently as possible."

However the mayor of New Zealand's largest city says local infrastructure and service costs can no longer be funded by property rates alone.

Auckland mayor Len Brown said Auckland has never faced a critical need for roads, rail and other infrastructure.

"All of that against the backdrop that Auckland as a city is growing by 40,000 people per annum."

Mr Brown argues there's no way ratepayers can carry the full cost of development and something will have to give.

"There's nothing to replace the fact that we, under the present rating system, do not have the revenue stream."

A business think tank is also calling on the Government to change its thinking on the funding of local councils.

New Zealand Initiative executive director Oliver Hartwich said councils need to be incentivised to grow local economies.

"We think it is necessary for local government to have some access to either income taxes or sale taxes."

Mr Hartwich reports when the economy grows, central government has a higher tax take and lower costs, but local councils get the same rates take and have to do a whole lot more.

"When a local economy grows we expect local government to pay for the infrastructure for the roads, for the water and the sewerage system, at the same time the rates revenue doesn't fluctuate."

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