NZ s Local Government Funding Review

Transcription

1 Presentation to Local Government NSW NZ s Local Government Funding Review Malcolm Alexander Chief Executive 27 August 2015

2 Today s objective > What is LGNZ trying to achieve? > How does the Funding Review fit with that? > What was our process? > What are our conclusions? > Where to from here?

3 Vision why we do what we do > What s your purpose? What s your cause? What s your belief?...why does your organisation exist? Why do you get out of bed in the morning and why should anyone care? > People don t buy what you do, they buy why you do it

4 VISION THE WHY Local Democracy Powering Community and National Success

5 Policy RMA Earthquake Strengthening Transport Housing Affordability Health & Safety Rules Reduction Taskforce Strategic Projects Funding Review Vision is a destination, a fixed point to which we focus all effort Strategy is a route, an adaptive path to get us where we want to go V Relationship Management Political Officials Business NGOs Sector 3 Waters Project Risk Management Review Strategic Themes Performance & Communications I S I Performance Support EquiP CEO Recruitment & Performance Management Digital Tools Training Dispute Resolution ONRC Economic Development /Trade & Investment Local democracy powering community and national success O N LGNZ Business Plan & Communications Strategy

6 Business Plan 7 key priorities > Governance and performance excellence > A shared national approach to addressing regional development and growth across all of New Zealand > Developing a sustainable funding model for local government > Leading effective infrastructure development and funding policies > Setting an agenda of regulatory reform and development of more effective policy-setting in areas impacting local government > Sector-led policy on important environmental issues for effective management of natural capital > Strengthen local democracy and the value of local government

7 Principal workstreams > Reputation and voter engagement Communications Performance > Funding and incentivisation Sharing the burden Cross-subsidising the Crown Revenue and behaviour > Economic development Cities and regions Infrastructure & risk management > Resource management system Time to stop bandaging? Water reform Urban and rural issues

8 Understanding ratepayers views.

9 Turning it around

10 Sector financial position > Local Government: A Financial Snapshot was prepared using the criteria that LGFA employs when assessing a council s prudential position > These criteria include: 1. Debt levels relative to asset base 2. Debt levels to population The local government ratio of debt to assets is at a prudent 9 per cent Equivalent of a $36,000 mortgage on a $400,000 home 3. Ability to repay debt 4. Ability to cover interest (finance cost) obligations 5. Population forecasts

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15 Background to review > 2012 Better Local Government > Re-organisation referenda rules relaxed > Auckland Council > Profound demographic change > Kaipara District Council > Infrastructure investment (new and renewals) > Managing growth/managing decline

16 Demographic change

17 Local government expenditure by activity

18 Local government funding sources

19 Rates as a percentage of income

20 Local government expenditure % of total public expenditure & revenue

21 LGNZ Funding Review > Cllr Penny Webster, Auckland Council > Cllr Raf Manji, Christchurch City Council > Peter Bodeker, Otago Regional Council > Adam Feeley, Queenstown-Lakes District Council > Chris Ryan, Waitomo District Council > Phil Wilson, Auckland Council > Mark Butcher, LGFA > Michael Barnett, Auckland Chamber of Commerce > Rob Cameron, Cameron Partners, > Stephen Selwood, NZCID > Nick Clark, Federated Farmers > Dr Oliver Hartwich, NZ Initiative > Professor Claudia Scott, Victoria University

22 Target audiences and objectives > Target audiences > Objectives General public Information dissemination Elected members Council officers Political parties What councils fund Fundamental trends in demography etc Building a case for reasoned change Government

23 Four Key Themes > Need for central-local government partnership There is a need to develop an effective partnership between local government and central government around shared goals and strategies for the activities pursued by local government, and how those activities can be prudently funded over time > Sector Improvement (there is no free lunch) Before pursuing fundamental changes to the funding regime, the local government sector needs to assure communities that it is open to innovation in service delivery so as to build confidence over time in the quality of the spending decisions that it makes > Diversity of New Zealand s communities The diverse nature of New Zealand s communities raises different challenges > Funding mix required An appropriate funding mix that includes greater use of tools already available to local government, in particular the use of prices (user charges) where appropriate and a prudent use of debt, especially for assets that have an inter-generational benefit

24 Discussion paper > Deliberately did not recommend any particular solution > Designed to articulate the issues in a factsbased, non-emotional manner > Looking to build stakeholder allies as we anticipated deep scepticism from central government > Designed to raise completely new (for NZ) ways of thinking about funding and to link those ideas with an incentives approach to outcomes

25 Options for change > NZ tax design (economic efficiency, fairness, simplicity) > Available tax bases (income, expenditure, land, poll, transactions) > Local income tax > Sharing revenue to align incentives (e.g. value uplift) > Local expenditure tax > Selective taxes (road and fuel taxes, environmental taxes, transaction taxes, tourist taxes) > Addressing the needs of vulnerable communities Methods of available for distributing funding from central to struggling local government e.g. equalization payments

26 The 10 point plan > Deliberately written in a short pithy manner > We wanted this to be accessible to the wider public and to business > Essentially it s a manifesto for measured change > We are using it in our interaction with political parties and stakeholders as a plan for change

27 What it is and what it is not > It is not - a plan to increase the country s tax burden > It is not a desire to avoid prudent fiscal management > It is not - wishful thinking (these ideas are not novel) > It is - a plan to change the incentives that operate in the local government sector > It is a genuine desire to share the funding burden (reduce the importance of property tax) > It is a genuine desire to address looming demographic issues

28 Incentives & performance: saying yes to growth > Public costs and benefits of development separated > Taxes on economic activity go to central government > Costs associated with increasing economic activity (esp. infrastructure) are borne locally > Almost by definition central government is progrowth and local government becomes an obstacle to growth

29 The 10 ideas 1. Special economic zones 2. Cost sharing 3. Remove rating exemptions 4. Simplify the rates rebate scheme 5. User charges vs. rates 6. Road user charges etc. where economically efficient 7. Share in value uplift 8. Minerals royalties 9. Tourist levies 10. Fit for purpose development contribution regime

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