Councils back Act and National GST idea as frustration builds with Government

Wellington is facing a crisis with its existing water infrastructure which has lead to several burst mains across the city. Video / RNZ

The Government is getting in the way of councils delivering for their communities, according to a survey 61 mayors and council chairs – but it could help out by picking up Act and National’s idea of sharing GST revenue with local government.

Local Government NZ and law firm Simpson Grierson conducted the survey ahead of this week’s LGNZ conference in Blenheim.

It found that 80 per cent of mayors and chairs felt “central government policies and decisions” were one of the top two biggest impediments they faced to achieving results for their community.

That was followed by funding and financing issues, which 70 per cent of respondents selected as one of the top two issues facing councils.

Councils’ angst over central government policy comes as Ministers plot a radical shake-up of local government, stripping councils of their responsibility for delivering freshwater, wastewater, and stormwater services, and reforming their role in planning.

Councils are keen to get their hands on more funding tools.

Mayors and chairs commented to the survey “that a share of the GST revenue generated in their districts should be returned to local government”, saying GST was the “clear favourite” revenue stream of people surveyed.

Southland Mayor Gary Tong told the survey Treasury should “actively look at” the amount of road user charges and GST paid by people in his region, which was then spent in other parts of the country.

Waipā District Council Mayor Jim Mylchreest said councils should get a “share of GST”, particularly the GST paid on council rates as well as a share of GST paid on the development of new sections.

“LAs [local authorities] and developers provide all of the services and take all of the risks and Central Government pockets the GST on every new section created,” Mylchreest said.

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Act and National have recently floated similar ideas. National wants to at least explore the idea of councils getting the GST collected on rates, while Act has launched a policy to share half of the GST revenue earned from building a new house with whichever local council issued that house’s consent.

Act deputy leader Brooke van Velden said it was “great to see councils supporting Act’s policy proposals which encourage more houses to be built”.

“Instead of forcing councils to come begging for special funds from the Government, Act would provide an enduring and predictable solution for infrastructure funding,” she said.

Councils have many concerns about three waters reform, which could see them handing over their water assets to new publicly-owned entities which would run and fund water services.

But nearly two-thirds (64 per cent) of mayors and chairs said they were concerned the reforms would lead to a “loss of accountability to local communities”, while 53 per cent said they were concerned at “diminished local government service delivery and infrastructure”.

A quarter of mayors and chairs said they were concerned about increased central government influence in water service delivery.

Councils were more optimistic about the Government’s RMA reforms. Mayors and chairs were asked to select two things they hoped RMA reform would achieve; 70 per cent said “improving the efficiency and effectiveness of resource management processes”, while 33 per cent said ensuring urban growth and development keeps up with population growth.

One thing councils are fairly united on is that the most pressing issues in their area aren’t actually their problem.

Asked to rank the top two social problems afflicting their district or region, 51 per cent said inequality, 40 per cent said substance abuse, 36 said poverty and 26 said homelessness.

But when asked who had primary responsibility for these problems, only 2 per cent of mayors and chairs said it was councils, with 91 per cent saying the problems belonged to central government.