Federated Farmers: Traction for rates reform

General Policy Manager Nick Clark

Sceptics suggest that this is about local government wanting to grab more revenue to fund more spending, but even LGNZ has acknowledged that councils must both improve their performance and reputation and have access to a range of fit-for-purpose funding tools.

Federated Farmers is welcoming Local Government New Zealand's recently announced manifesto for reform of local government funding.

Readers of the NFR will be very familiar with Federated Farmers' long-standing advocacy for a reduction in the over-reliance on property value based rates to fund local government.

Rates are something we devote a lot of time and energy to, both at a local level and nationally.

Until recently, it seemed that our efforts to get reform of funding were destined to founder on the indifference of local and central government.

That's now changing with local government nailing its colours firmly to the mast of funding reform.

This has been prompted by realisation that current funding sources are increasingly inadequate to cater to demographic change, the ever-increasing costs of key infrastructure like water and roading, and the need to promote economic development.

Sceptics suggest that this is about local government wanting to grab more revenue to fund more spending, but even LGNZ has acknowledged that councils must both improve their performance and reputation and have access to a range of fit-for-purpose funding tools.

LGNZ's 'ten point plan' for reform comprises the following ideas:

1. Special zones for growth to test new ideas.

2. Cost sharing with central government when new centrally imposed costs are considered, particularly where national benefit applies.

3. Removal of mandatory rating exemptions.

4. Application and administration process of the rates rebate scheme simplified to increase uptake.

5. Better guidance on trade-offs for funding council services from prices (user charges) or taxes.

6. Road user charges, targeted levies and fuel taxes allowed where economically efficient.

7. Retention of a share of value uplift arising from additional economic activity related to local intervention and investment.

8. Proportion of mineral royalties attributed to local activities.

9. Specific charges and taxes on visitors where economically efficient.

10. Increase the range of community amenities funded through development contributions.

Federated Farmers agrees with most of these ideas, especially broadening the rating base and making greater use of tools not based on property value.

These should ease the rating burden, provided of course they're not just used to boost spending.

We strongly agree with the need for local government to deliver its activities efficiently and effectively.

The key is about what are the most appropriate ways to fund modern local government and how funding of local government should be sending the right messages to central government, councils and communities. Currently, over-reliance on property value rates fails this test dismally.

Overall, LGNZ should be commended for its efforts and it's refreshing that local government is taking this forward. Hopefully the Government will listen.