Property Council chief executive Connal Townsend said today central & local government “need to develop a range of innovative funding tools beyond rates & individual project funds. To be sustainable those tools should be linked to growth.”
He agreed with mayor Phil Goff, who told a Property Council breakfast last week funding infrastructure with rates wasn’t sustainable: “Rates are a limited & extremely blunt way of raising income. The property industry continues to have issues with rates & the development contributions system. It is not an effective or sustainable way to fund local government.
“Yes, Central Government should & does make significant financial contributions to individual projects. But that is not sustainable either.”
Mr Townsend’s solution – partnership between the 2 levels of government – is at last on the way in 2 forms, though neither is adequate to meet the challenge.
One is the formation of the Auckland transport alignment project last year, when the Government & Auckland Council joined in establishing long-term priorities. However, there would be a long-term deficit and there’s been no resolution of how that should be funded – the project calculation has started with a $24 billion funding need, and a $4 billion shortfall projected.
Mr Goff said: “Auckland Council would need to come up with at least $200 million/year to meet the shortfall. I’m not going to ask ratepayers to shoulder that burden, it’s not viable nor is it equitable.”
Secondly, the Government has announced its proposal for urban development authorities, which would be project-related and combine the forces of both levels of government. Those authorities would focus on regeneration in a specific area and close down on completion, though it would make sense to retain the same governance structure and enable an authority to switch to the next project rather than start afresh.
The mayor has proposed in the council budget that the hotel sector be charged for tourism infrastructure. Mr Townsend commented: “If we are serious about Auckland becoming a global city we need a partnership between central & local government. They need to develop a range of innovative funding tools beyond rates & individual project funds. To be sustainable, those tools should be linked to growth.”
The flipside of that is that, when there’s a downturn, the industry wouldn’t pay for what would be long-term infrastructure provision.
And the other potential source of funds, not mentioned, is the hike in gst which the Government retains in good times, inadequately funding local infrastructure required to support the tourism growth.
My conclusion: It’s scary, really, that we have so many political & business leaders with not one new or innovative idea among them on alternative funding, that the same issue is raised often without any thought of resolution.
The one solution, a variation on a bed tax, is a more expensive way of doing what a slice of gst could do more easily & neatly.
The world has cities which have created infrastructure to meet these kinds of needs, and the world has potential infrastructure funders. They’ve been walking through the mayor’s office in Auckland for a decade.
Attribution: Property Council release, my thoughts.