LGNZ rates review backed

00:00, Apr 12 2014

Tasman district's mayor Richard Kempthorne backs Local Government New Zealand's review of alternative methods of funding councils apart from rates, saying the property rate-based method is not working for growing or aging communities.

"It's the sort of discussion we need to have."

Property owners in aging or growing communities could not afford the rate increases to fund the infrastructure upgrades demanded by either growth or legislative change.

Kempthorne said alternative council funding sources may not just be limited to communities and he was keen to see additional money come from central Government coffers, for example councils receiving a portion of the GST raised from goods and services sales which now feed into the Government's consolidated fund.

Nelson Tasman Chamber of Commerce chief executive Dot Kettle hoped any rating changes would not be income based or lead to a shift of business and wealth out of communities.

Nelson and Tasman were closely tied and there was a lot of movement between where people live and work. "We would not want to see that stop or people move out of the region," she said.


Kettle also opposed any change which imposed more costs on businesses' ability to get product to market.

"Business cannot continually absorb additional costs," she said.

LGNZ's announcement that it will review the property rate system was welcomed by Michael Barnett, who chairs the Local Government Forum, a group of business organisations with a keen interest in local government policy.

"Modern local government is broadly empowered in terms of its role and responsibilities yet it is restricted to a narrow, archaic funding base made up of property value rates and per property charges.

"Property value rates bear no relationship to either a person's relative ability to pay, or use of a service. Rates prevent communities from truly assessing the costs and benefits of council activities. For many businesses, this means a heavy tax on a key asset to pay for all manner of community services many of which they may rarely, if ever, use and have very little say over," he said.

LGNZ president Lawrence Yule said it was important for complementary alternatives to be found.

"Our focus is on developing a strategy and model that is sustainable for New Zealand communities in the long term."

Examples of funding tools that might be reviewed for appropriateness in a New Zealand context included local income taxes, local consumption taxes, congestion charges, visitor charges and payroll taxes, he said.