'Loose spending' Bill should be delayed

27 Jun 2018

BusinessNZ has argued against proposed changes to the Local Government Act.

The Local Government (Community Well-being) Amendment Bill would allow councils to spend rates money and levy property developers to provide a wider range of social and cultural activities.

BusinessNZ economist John Pask says the Bill would allow loose spending by councils and cause rates to rise further.

Speaking to the Governance & Administration select committee, Mr Pask said local government should confine its spending to core services such as water, sewerage and local roads.

“The ‘four well-beings’ in this Bill are likely to push up local government costs and increase the rates burden on domestic and business ratepayers.  Business ratepayers are already over-levied, for example in Wellington businesses pay almost 3 times more in rates than households for an equivalent level of capital value.

“The Bill also seeks to restore council powers to collect development contributions from property developers for a wide range of purposes.  Councils can currently levy developers to help pay for water, sewerage and roads infrastructure.

“The Bill would allow development contributions to be levied more widely, for ‘nice to have’ social and cultural amenities.  This would significantly increase levies on developers, making it more costly for new housing to be developed in future.”

He said the Bill should be delayed until the Productivity Commission has completed its study on local government funding mechanisms.

“The Bill pre-judges the public inquiry promised in the Labour-NZ First Coalition Agreement to investigate the drivers of local government costs and its revenue base.”

BusinessNZ’s submission on the Local Government (Community Well-being) Amendment Bill is on www.businessnz.org.nz.