Share tax take with cities, Government told

The Government should give councils a fraction of its $50 billion tax take to revolutionise cities such as Auckland and ease the growing burden on ratepayers, says Heart of the City business group.

Heart of the City chief executive Alex Swney yesterday urged the Auckland City Council to lobby the Government for a nationwide $1 billion tax refund a year worth $300 million to $400 million to the Auckland region.

"While we tinker with $360 million of rates per year in Auckland City we are never going to get the city we want," said Mr Swney.

The flamboyant business leader cut a sliver from a $20 note to show how little went in rates compared with personal and company taxes and GST.

For every $20 in taxes, $18.80 went to Government taxes and $1.20 to Auckland City and Auckland Regional Council rates, he said.

Mr Swney asked why the council should impoverish ratepayers with compounding rates increases and unsustainable debt when central government could follow other countries and give councils a share of taxes.

"As little as 2 per cent of central government taxes could have the effect of providing a more socially equitable and robust revenue base for all councils in New Zealand."

Mr Swney was giving a verbal submission on the council's long-term plan that is seeking ways of funding $3.7 billion of new works such as the waterfront Tank Farm redevelopment, a revised eastern highway and even basics such as footpath upgrades.

The council has no money to pay for any of these new works. This year's proposed household rates rise of 11 per cent simply maintains the status quo and comes on top of a 9.7 per cent rates increase last year.

Pressure has also come on the ARC for a steeper rates raise to plug a $710 million public-transport funding gap, including comments by Finance Minister Dr Michael Cullen that annual increases of 4.9 per cent over 10 years were too low.

Local Government Minister Mark Burton yesterday quashed the idea of central government directly funding councils. He said it would result in the Government having a greater say in communities' spending decisions.

"This Government would not welcome this situation and values local communities determining their own spending priorities through their elected councils," Mr Burton said.

But Auckland Mayor Dick Hubbard said the Government should look at what state and central governments were doing overseas in the way of funding councils. "We are outgrowing rating as a primary means of funding cities such as Auckland."

He said that instead of Auckland beating a path to Wellington with changing wish-lists it was worth looking at a long-term funding formula that provided greater certainty and was not subject to political and other changes.

Local Government New Zealand governance manager Michael Reid said a joint project with the Department of Internal Affairs looking at alternative funding sources for councils was exploring a number of issues, including more central government assistance for infrastructure demands.

A report was due in September.