13 November 2017

Councils highlight growth infrastructure as urgent issue

Local Government New Zealand says funding growth infrastructure is the highest priority for councils and welcomes the Government’s plans to review local government costs and revenue.

At a meeting of Local Government New Zealand’s Metro Sector on Friday (10 Nov), mayors and deputy mayors from New Zealand’s largest and fastest growing cities agreed the biggest issue facing local government is the funding of growth infrastructure, and that councils are keen to work with the new Government to find alternative methods of funding this as a matter of urgency.

LGNZ President Dave Cull says the Government’s commitments to reviewing the drivers of local government costs and its revenue base are timely and necessary and with councils preparing long-term plans swift action is needed.

“Councils in fast growing areas face serious issues with funding the infrastructure needed to accommodate new residents, such as roads and essential drinking, waste and storm water infrastructure,” Mr Cull says.

“Relying primarily on property rates and the current development contributions regime to fund incredibly expensive new infrastructure for new residents is not sustainable or fair, and many councils are reaching their debt limits. We are looking forward to working with the Government on finding alternative funding methods.”

Mr Cull says the message about infrastructure funding has been heard time and again during a nationwide tour of councils he and LGNZ Vice President Stuart Crosby have undertaken in recent months.

“It’s not just big cities that are experiencing this either, it is an issue for all councils as growth returns to the regions, in particular for councils with small rating bases needing to upgrade or renew infrastructure,” Mr Cull says.

Potential solutions could include further special purpose vehicles to allow councils to borrow off their balance sheets, visitor levies or user-pays systems.

Hamilton City Council mayor Andrew King says growth councils, such as Hamilton, are doing everything they can to leverage the opportunities presented by growth.
“These opportunities however come with a number of challenges, not least the costs of infrastructure to enable growth,” Mr King says. “The ability of individual councils to fund this infrastructure is limited. Councils and the new Government need to collaborate on new funding models so we can build infrastructure for new homes with urgency and ensure a supply of affordable housing. Success will mean councils can better manage the future impact of growth-related costs for our ratepayers.”

The message from other councils is the same.

Auckland deputy mayor Bill Cashmore says there is an “absolute dire need for alternative funding streams for local government infrastructure to be delivered for this long-term plan process”.

Greg Brownless, mayor of the booming Tauranga and now New Zealand’s fifth largest city, says “as soon as possible alternative funding streams such as a share of GST need to be actioned by the new Government to fund critical infrastructure”.

And Queenstown Lakes mayor Jim Boult is also calling for a contribution from its visitors to help fund key infrastructure used by tourists.

“We've got a massive infrastructure spend in front of us created largely by burgeoning tourism and the district’s small ratepayer population needs some form of new model to meet this challenge,” Mr Boult says. “We urgently need new legislative tools, such as a visitor levy, to help build the infrastructure Queenstown needs.”

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