Cash-strapped councils need to look at spending - Bennett

Local Government Minister Paula Bennett. Photo / Duncan Brown

Cash-strapped local councils should take a closer look at their spending before seeking more funding or introducing new taxes, Local Government Minister Paula Bennett says.

It follows the release of a discussion paper by Local Government New Zealand (LGNZ) yesterday, which said new ways of raising funds were needed to address the deficit as the cost of infrastructure soars.

It suggested some radical options, such as creating new local income taxes or a payment of gas and coal royalties to councils.

But Ms Bennett today said the Government would not be interested in creating more taxes.

"I certainly can't see more taxes being the way that this Government looks at it," she told media today.

But she said she recognised there was a cost to local councils to upgrade infrastructure.

"I certainly have concerns, both from an urban and a rural development perspective as to what needs to be done as far as critical infrastructure [is concerned], and I can accept that there is some cost with that," she said. "But I think that is also about council's planning, about them looking at what their critical business is.

"I'm quite happy for them to have a conversation about funding, as long as they're equally having one about spending."

Asked if she thought there were some councils that were not managing their spending as well as they could, she said: "I certainly think there's some instances of that, yes."

However, she would not go into detail about which councils were failing to keep their spending under control.

"I haven't got a specific example to give you at this time, but I think that it's always prudent, as both central government and local government, to be looking at what they're spending where, how they're using tax-payers money and rate payers money," she said.

"And there's probably some examples which are raised with me often, where some people will think the spend is good and some people won't. The validity of that is really up to local councils to decide what is best for their citizens."

Pushed further, Ms Bennett would not point the finger at any specific council.

"I just think there are a whole lot of different ones, and they are at some point a level of opinion as well, so it would be very presumptuous of me to say what I thought was important and what wasn't."

Yesterday, LGNZ president Lawrence Yule said the paper was intended to stimulate discussion about various funding opportunities in New Zealand.

Councils spent about 10.5 per cent of all public expenditure in New Zealand, but raised only 8.3 per cent of all public revenue, LGNZ, made up of heads of local government, said.

One solution touted was the payment of gas and coal royalties to councils in areas such as Taranaki and the West Coast, respectively the locations of those natural resources.

Other new revenue-raising options suggested were local income taxes, regional fuel taxes, and local expenditure taxes. These would all require legislative change and fell outside the Local Government Act, LGNZ said.

The next stage would involve collecting submissions from the public before release of a final report in June.