Local government keen to see funding tools for regional deals

Local government is largely onboard with a government proposal to create regional deals, but mayors are keen to see what tools will be available to them to help pay for projects.

The day after the prime minister blasted councils for spending ratepayers' money on nice-to-have fantasy projects, the government came in with a sweetener for the sector.

Under a new regional deals framework, central government will provide local government with funding tools to allow them to afford new infrastructure and other investments. But, springing off the prime minister's message, the projects will need to stick to the basics: Economic growth and productivity, critical infrastructure, and affordable, quality housing.

Five regions will be invited to provide proposals, with the first finalised by next year. They would be selected on the basis of being in a high-growth area with clear objectives around economic growth and productivity, existing partnerships and support structures, and already being ready to deliver on a deal.

The partnerships would be over 10 years, with a 30 year view. The government has made it clear it is not putting money on the table, and would instead increase access to funding and financing tools.

The Regional Deals framework document said, at the moment, councils were not rewarded for economic growth, and so new funding and financing tools would be looked at.

Examples in the document included value capture, targeted rates, tolling and congestion charging.

Local Government New Zealand had recently proposed other measures such as a 'bed tax' on tourists, or returning GST on rates back to councils.

LGNZ president Sam Broughton said: "We've been really clear that growth has been paid for by local councils, and all the benefits from growth accrues to central government through GST and taxes".

LGNZ was pleased with the announcement, given it had already released a draft proposal on regional deals. It said councils already plan for 10 years, so it was encouraging the government was looking beyond its own budget cycles.

"The broken system that is funding local government at the moment needs to be addressed. And the document today says that the government acknowledges that, and wants to look at new funding streams," Broughton said.

"That's a hugely welcome admission from the government, and we're really keen to look at how those tools can now enable communities to be funded in ways other than rates."

Local Government Minister Simeon Brown said there was "no magic money tree", but government would work with councils on the options available to them.

"There may be legislation changes that are needed to ensure that councils and regions can actually have that investment and have those structures in place which deliver for their regions as well."

Mayors attending the LGNZ conference were also pleased with the announcement, but cautious around how it would be implemented.

Ashburton mayor Neil Brown was looking forward to conversations with ministers around the detail.

He said Ashburton needed a second bridge, and would look at whether that could be built as part of a regional deal.

"There's probably a few ways to fund it, whether it's from taxes, rates, or tolls. There's a few ways it can be done, so let's look at them, work through them, and find the one that works best," he said.

Far North mayor Moko Tepania said he would look through the detail of the framework to understand how it could be implemented for Northland.

"We're gearing up in Northland. We're really lucky to have such a strong regional identity, probably because we're at the end of the bloody earth, up the top of the country there. But we've got really strong collaboration. There's a Northland Mayoral Forum across all of our councils, we've got strategic priorities that we all equally agree on," he said.

"So we've already done the mahi, we're ready to go, so it'll be cool to see who's getting picked, or how we apply, out of the five regions that are gonna be the guinea pigs for this."

Hamilton mayor Paula Southgate said she believed Waikato councils would band together and deliver on what the government needed.

She said Hamilton was the fastest-growing city, and was logistically important. But she was still waiting on the detail of the funding and financing options.

"Debt is debt is debt, and so it does need to be paid back by the public, by the ratepayer, over a period of time. There has been talk about offshore funding, partnership with business, those sorts of things. And so the devil's in the detail," she said.

Given the long-term nature of the details, LGNZ wanted to see cross-party support to ensure a change of government would not lead to a change of mind.

Labour indicated it was open to working with the government on deals, but it wanted assurances that ratepayers would not end up picking up the tab.

"There is absolutely no use setting up a deal that will only see the cost of infrastructure fall back on ratepayers and councils who cannot pay for it. There must be central government partnership, or buy in, so there is sustainable long-term funding," Labour's local government spokesperson Kieran McAnulty said.

Mayors had also taken onboard the 'tough love' approach from the prime minister, and his challenge to keep to the basics.

Hurunui mayor Marie Black said sometimes it was difficult to hear the truth, and her council's needs were around roading and basic infrastructure anyway.

"Sometimes messages are really heard to hear, but it's how I can actually turn that information into a positive to take it back to our rural community," she said.

Neil Brown said his council's latest budget was an infrastructure budget, and so did not believe he was wasting money.

"He seemed to put a shot across the bow that wasting money's not appropriate going forward. We'll take that message onboard and we'll make sure we don't do that to the best of our abilities."

Tepania said local government "got a growling", but councils would pick themselves up and carry on.

"On face value I was disappointed, and it felt like a middle-finger to our incredible local government sector, but at the same point in time, he's the prime minister and we've seen this narrative of the government looking at their own departments, and so we shouldn't be surprised to see that."

Southgate understood the prime minister's messaging around getting spending under control, and focusing on core infrastructure, but argued that nice-to-have projects were what made a city worth living and investing in.

"You wouldn't go and invest in a city that had just good roads, good rubbish pick-up etc., you want a city that's got some fabric to it, you want libraries and playgrounds for children, some good educational institutes, you want a place where businesses want to coexist alongside you. The economy's somewhat more nuanced than core infrastructure, and councils have a critical part to play in placemaking," she said.

Broughton agreed, saying it was "just not true" councils' only work was roading and water supply.

"Communities need to be more than just roads and water supplies. People want to live in places where they can connect, where their children can run around outside, and places that feel good to be," he said.

Simeon Brown defended the tone the government was taking.

"We're reflecting what the ratepayers and taxpayers are thinking, when the average rate increase was 15 percent this year, and people are opening their rates bills and feeling very angry," he said.