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Ten ways to fund local government: LGNZ's plan

LGNZ has launched the Local Government Funding Review 10-point plan: incentivising economic growth and strong local communities.

The document is designed to stimulate conversation and action about options for an effective local government funding regime.

LGNZ launched the plan in Rotorua at its 2015 annual conference. The manifesto stems from LGNZ’s year-long review of local government funding and follows a discussion paper released in February this year. It focuses on key actions and policy decisions needed to provide greater funding flexibility for councils and describes the next steps for local government and its sector partners.
LGNZ stresses the review is not about increasing the tax burden nor is it about a quantum funding uplift.
President Lawrence Yule emphasises property rates should remain a cornerstone but that local government needs a wider set of funding sources at its disposal. This includes a strong incentives-based regime, to lead to better performance of both arms of government to meet the needs of communities.

The 10 proposals are:

  1. An agreed priority and action plan to advance “special zones” for growth to test new ideas and drive economic prosperity.
  2. When new centrally-imposed costs are considered – and particularly where national benefit applies – a cost benefit analysis and agreed cost sharing with central government should be mandatory.
  3. Mandatory rating exemptions should be removed.
  4. The application and administration process of the rates rebate scheme should be simplified to increase uptake.
  5. Better guidance is needed to assist councils make decisions on trade-offs about whether to fund services from prices (user charges) or taxes.
  6. Road user charges, targeted levies and fuel taxes should be allowed where it is economically efficient.
  7. Councils should be able to retain a share of any value uplift arising from additional economic activity related to local intervention and investment.
  8. Local authorities should receive a proportion of any mineral royalties attributed to local activities.
  9. Councils should be allowed to levy specific charges and taxes on visitors where economically efficient.
  10. The decision to limit the range of community amenities funded through development contributions should be reconsidered.

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