Brian Rudman: Bed tax a fairer way to cover cost of visitors

It's not that I begrudge the hoteliers and other travel-related industries the killing they made out of the Lions tour. But I'm more than a little hazy about why Auckland City ratepayers had to fork out at least $147,000 to help make it happen.

How much fairer it would have been if an accommodation bed tax had been in place, so that the people who came to enjoy the festivities and to use the city infrastructure provided for their benefit, helped to pay for the cost of their stay.

Visa International estimates that the 29,000 Lions supporters spend more than $30 million in New Zealand over the past two months.

With all this money sloshing round, would they have noticed a 5 per cent impost on their hotel bill? Particularly if they were told the money was going on, among other things, street pole banner production, the purchase of 1000 posters welcoming them and the cost of the "Footy Fun and Fireworks" event at Viaduct Harbour.

It also paid for the big-screen barbecue and live screening of the test down at the Viaduct for those without tickets to the real thing.

I'm all for encouraging tourism, but with all the other more urgent demands on the city's finances, and rate bills annually outpacing the rate of inflation, this is one cost the poor homeowner should hardly have to shoulder.

The high cost of local government was raised by National leader Don Brash, Prime Minister Helen Clark and Local Government Minister Chris Carter at this week's annual conference of Local Government New Zealand.

Dr Brash's recipe for holding costs involves reducing the role of local government.

"The National Party," he told delegates, "is concerned that the Local Government Act makes a council's role so broad in meeting the social, environmental, economic and cultural wellbeing of communities that they are being set up to fail.

"It is just unrealistic that your councils can do all of this with just 2 per cent of the country's GDP."

A National government would also review compliance and audit costs, he said.

Nothing there, however, about reviewing the fundamental problem, the antiquated system of property rates.

Unlike National, Labour has no intention of trimming the role of local government. But neither is it offering any revolutionary advances when it comes to new means of financing.

Back in August 2002, Local Government New Zealand presented incoming minister Chris Carter with a briefing paper outlining the "longstanding grievance" over funding, and called for a commitment to look at alternative funding sources.

The paper proposed that "the most appropriate ways of funding local government activity should be explored from first principles, reflecting the nature of the 21st century economy and society". Stirring stuff.

The outcome, however, has been a joint working party which, Helen Clark announced to delegates, recently produced a draft report. It is still secret but the Prime Minister said the "key conclusions of the first stage" are that, "while local authorities are under some degree of fiscal pressure, most are also in a position to manage with existing financial tools and resources".

But a "small number" of councils do have relatively high levels of rates and debt, and some households and communities "have difficulties affording their rates".

Officials were to conduct a "second phase" of case studies and "generate policy options for consideration" later this year, said Helen Clark.

She then referred to the expansion, from next July, of the rates rebate scheme for the poor.

From this distance, neither party has confronted the challenge issued in 2002 to go back to first principles and come up with a 21st-century method of funding local government. Instead, the talk is of tinkering. Meanwhile, rates keep rocketing.

Which takes us back to the bed tax. It's taken me a while to come round to the idea. Initially it seemed rather unfriendly to tax one's visitors to build the convention centre or provide the infrastructural support for the rugby match you'd enticed them here to attend. But many of our Pacific Rim neighbours do it, and everyone accepts it is as natural as tipping the waiter.

And as for fairness, it's certainly fairer than forcing the cost on the innocent ratepayer. Auckland City already has the power to impose this charge. What's stopping it?