Local government funding and financing

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The Government has asked the Commission to undertake an inquiry into local government funding and financing and, where shortcomings in the current system are identified, to examine options and approaches for improving the system.

Local government plays an essential role in New Zealand’s system of government as both a provider of services and a voice for local democracy, and its activities have a huge influence on the day-to-day lives of New Zealanders. Local government is responsible for providing the services (including water, transport, flood protection, waste management) that enable communities to function effectively. Importantly, local governments also provide a range of services such as community development and recreation and sport that support the wellbeing of local communities.

This inquiry is about the cost of services provided by local government and how they are paid for. It will examine the adequacy and efficiency of the current local government funding and financing framework.

  • Funding tools are the sources of money available to provide for infrastructure and services over time. For example, a council may fund an infrastructure project through sources such as rates and use this revenue to recover the costs of financing (which would comprise interest and capital repayments in the case of borrowing).
  • Financing refers to the way in which debt and/or equity is raised for the delivery of a project or service at the time it is needed. So, for example, a council may finance an infrastructure project through borrowing to ensure that it has the cash on hand to pay the upfront bills.

Find out more by reading the terms of reference here.

The Commission received a letter from the Minister of Finance dated 29 April 2019 recommending that we consider whether a tax on vacant residential land would be a useful mechanism to improve the supply of available housing for New Zealanders. Read the letter here.

Next steps

The Commission will release an “issues paper“ at the start of November outlining the context and scope of the inquiry, key issues to be investigated and a list of questions to be addressed and evidence sought. We will invite you to review the issues paper and share your feedback on the questions asked or on any issues that you consider relevant to the terms of reference

Key dates

Release of draft report            4 July 2019

Final report to Government      30 November 2019