LGNZ welcomes ‘Better urban planning’ report’s call for a wider funding toolbox

The Productivity Commission’s new report into New Zealand’s urban planning system which highlights the need for councils in high growth areas to have access to more tools to fund infrastructure is spot on, Local Government New Zealand says.

The report, Better urban planning, was commissioned by the Government in 2015 and released today. The inquiry aimed to set out what a high performing urban planning system would look like.

Key findings of the report confirm Local Government New Zealand’s long-held view that alternatives to a reliance on rates and debt are needed to assist growing communities put in place transport, drinking, waste and storm water services and other essential infrastructure and amenities that communities need.

LGNZ President Lawrence Yule says there are a number of actions identified in the report which would assist councils with growth challenges.

In particular, the Commission’s report calls for a wider set of funding tools for high-growth councils such as value capture and the use of urban development authorities to assist with large scale development.

“The challenges growth councils face include major issues like housing supply and the cost of funding infrastructure needed for development, and in many areas there are big questions about whether existing residents are able to afford to fund these developments,” Mr Yule says.

“Local government welcomes these important recommendations as a platform for policy development. A wider funding toolbox is essential. Urban development authorities are a tool widely used worldwide and will not be the whole solution but can be the catalyst for change. We are keen to have this additional tool for councils to deliver our key projects and to cut through some of the hurdles associated with fragmented land ownership,” Mr Yule says.

The report comes as the Local Government Funding Agency, which lends to 52 councils, says the need for alternative funding options is becoming more urgent.

LGFA Chairman Craig Stobo said at a recent LGNZ/LGFA quarterly media briefing that its member councils are expected to maintain a financial buffer for unexpected expenditure and should continue to display prudent financial management – a trend LGFA has seen since its inception. However with rising infrastructure pressure there is a need for alternatives to debt funding.

“Councils are generally in a strong position, and we expect them to remain within their financial covenants,” Mr Stobo says. “However there are critical infrastructure requirements particularly in areas of high growth or key tourism areas which can’t be ignored, and some of those councils have the largest funding challenges.”

LGNZ is tonight hosting a major issues seminar, Improving the pace and change of development, where the Productivity Commission Chair Murray Sherwin will speak about the new report, and Wellington Mayor Justin Lester, Christchurch City Deputy Mayor Andrew Turner and Panuku Development Auckland corporate affairs director Angelika Cutler will provide insight into the development issues faced in our biggest cities.

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