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New tools for councils dealing with specific cost pressures?


You have until Thursday August 29 to send in comments and submissions on the Productivity Commission’s long-awaited draft report Local Government Funding and Financing.

The report aims to help the government ascertain whether existing funding and financing arrangements are suitable for enabling local authorities to meet current and future cost pressures.
The local government sector has increasingly argued that it cannot continue to rely on rates as its main source of funding.
Among its many findings, the report describes the current funding and financing framework as “broadly sound”, noting that local authorities already have a wide range of options, “which gives them considerable flexibility in how they raise revenue”.
It goes on to say the current system, based on rating properties, “is simple and economically efficient, compared to alternatives, such as local income taxes”.
“Wholesale change to a radically different model would be expensive, disruptive and uncertain.”
It says the current system should therefore remain as the foundation of a fit-for-purpose future funding and financing system for local government. “However, councils need new tools to help them deal with some specific cost pressures.”
Delving deeper into the detail of the report, LGNZ says it finds that a high-performing local government is vital for community wellbeing, but that councils are struggling to deal with rising costs, and that incentives are misaligned.
LGNZ president Dave Cull says it’s pleasing to see the Productivity Commission’s report “calling out issues that LGNZ has been raising for some time”.
“They have identified four key areas where the existing funding model for councils is insufficient to address cost pressures, including the demand for infrastructure in high-growth areas, tourism hotspots, unfunded mandates and climate change adaptation.”
To read the full report and / or make a submission, go to www.productivity.govt.nz.

This article was first published in the August 2019 issue of NZ Local Government Magazine.


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