MEDIA RELEASE

Local government needs better funding tools

For immediate release on 1 November 2006

Basil Morrison, President, Local Government New Zealand, says the Local Government Rating Inquiry must lead to better funding tools, including an increased funding contribution by central government, if rates are to be sustainable.

“We support the Terms of Reference for the Inquiry and the suggested process for engagement with stakeholder groups and the public on rating issues. However, we already know that an objective examination of the current rating system will show it is under pressure from the additional responsibilities and costs faced by local government.

“One of the major drivers in the recent rates rises has been the need to upgrade and expand infrastructure. New Zealand has recently enjoyed a period of sustained prosperity and growth, with record real estate prices and sales volumes. This has placed greater demands on councils to enhance infrastructure and while some of the costs of growth can be covered by the use of development contributions, the remainder becomes a pressure on rates.

“New Zealand relies on a national network of local infrastructure to sustain economic growth. If the Government is to achieve its goals for economic transformation, then it has to acknowledge the platform for this growth is largely owned and operated by councils, and that it will need to make a greater contribution to councils’ activities to maintain and build New Zealand.

“I am delighted the inquiry will focus on how to sustainably fund the activities of local government, and not attempt to set limits around council functions. We are pleased the terms of reference confirm the principles and purpose of the Local Government Act. The nature and range of local and regional activities should be a matter for councils and their communities to determine within the framework of the Act.”

The local government sector looks forward to the inquiry progressing so it can be completed well before the local government elections in October 2007.

ENDS

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