LGNZ launches 10-point plan to incentivise local economic growth

LGNZ’s Local Government Funding Review 10-point plan: incentivising economic growth and strong local communities was launched today at the 2015 LGNZ conference in Rotorua.

The manifesto is the culmination of LGNZ’s year-long review of local government funding and follows its discussion paper released in February 2015. It focuses on key actions and policy decisions needed to provide greater funding flexibility for councils and describes the next steps for local government and its sector partners.

The manifesto is led by four guiding principles:
• an effective partnership between local and central government around shared goals and strategies, pragmatic testing of new ideas, and strong incentives for both arms of government to perform;
• recognition of the value of the private sector and community by recalibrating relationships with those sectors to incentivise partnerships and the achievement of shared goals;
• a local government which is open to innovation in service delivery, funding and financing; (within a environment of strong fiscal discipline); and
• a diverse set of funding tools for New Zealand communities to respond to the different challenges they face, with property rates as a cornerstone supplemented by revenue sources that equip local communities to meet current and future opportunities.

The document is a principles-based manifesto designed to stimulate conversation and action about options for an effective local government funding regime.

LGNZ President Lawrence Yule says providing an environment that supports local government’s ability to partner with others to efficiently achieve shared goals, and the incentives for all parties to encourage local economic growth, are vital parts of the conversation and a key aim of the 10-point plan.

“We are launching this plan because local government is facing unprecedented economic and demographic change and increasing community and government expectations,” says Mr Yule.

“We need to put ourselves and our communities in the best possible position to manage significant issues such as regional economic development, demographic shifts, climate change and rapid technological advancement.”

“We need to lead New Zealand’s communities through this change, but we need strong collaboration with Government and private sector partners.”

LGNZ reinforced that the review is not about increasing the tax burden nor is it about a quantum funding uplift.

“This is about leading a principled discussion with our key partners around more fit-for-purpose funding options,” says Mr Yule.

Mr Yule emphasises property rates should remain a cornerstone but that local government needs a wider set of funding sources at its disposal.

This includes a strong incentives-based regime, to lead to better performance of both arms of government to meet the needs of communities.

“Incentives such as a share in value uplift arising from additional economic activity can improve outcomes for local communities. We see a strong opportunity to test these ideas through Special Economic Zones.”

“The right incentives can create greater innovation in service provision, and provide a more diverse range of available funding tools,” says Mr Yule.

LGNZ acknowledges that local government needs to play its role.

“It’s important local government should be open to innovation in service delivery, funding and financing, and we should operate to the highest standards of fiscal discipline. This is a core focus of LGNZ’s recently announced Performance Uplift Programme.”

“LGNZ anticipates a productive and constructive discussion between local and central government, business and communities, to address the proposals and to implement the solutions communities need,” says Mr Yule.

The 10 proposals are:
1. An agreed priority and action plan to advance “special zones” for growth to test new
ideas and drive economic prosperity.
2. When new centrally imposed costs are considered (and particularly where national
benefit applies) a cost benefit analysis and agreed cost sharing with central government
should be mandatory.
3. Mandatory rating exemptions should be removed.
4. The application and administration process of the rates rebate scheme should be
simplified to increase uptake.
5. Better guidance is needed to assist councils make decisions on trade-offs about whether
to fund services from prices (user charges) or taxes.
6. Road user charges, targeted levies and fuel taxes should be allowed where it is
economically efficient.
7. Councils should be able to retain a share of any value uplift arising from additional
economic activity related to local intervention and investment.
8. Local authorities should receive a proportion of any mineral royalties attributed to local
9. Allow councils to levy specific charges and taxes on visitors where economically efficient.
10. Reconsider the decision to limit the range of community amenities funded through
development contributions.

LGNZ’s full 10-point plan: incentivising economic growth and strong local communities is available here.