Property Council welcomes recommendation

Property Council welcomes Productivity Commission’s recommendation to remove business rating differentials

Auckland, New Zealand, 5 July 2019: Property Council believes the Productivity Commission’s draft report on Local Government Funding and Financing includes some welcome changes, particularly with regard to the removal of differential rating for business.

Property Council New Zealand chief executive Leonie Freeman says, “while we believe the draft report could have been more critical of the current rates-based funding model, we are pleased that the report provides useful recommendations to improve our current system, particularly suggesting alternative funding methods to pay for much needed infrastructure.”

“Decision-making has played a key role in why councils have underinvested in infrastructure for years and is a key reason why the system is broken. Councils have a vested interest in maintaining the status quo which dis-incentivises alternative or innovative ways of doing things which could be more effective and efficient.”

“While the Productivity Commission’s recommendation to maintain the rates-based system needs further investigation, we are pleased with the recommendation to remove rating differentials. Property Council have been advocating for the removal of business rating differentials for years as there is no rationale to support their use.”

“We are also pleased to see the Commission recommending various funding alternatives to meet the demand in high-growth areas. In our submission to the Commission, we also recommended alternatives such as Value Capture and Special Purpose Vehicles and look forward to working more closely with the Government on further solutions.”

“The suggestion of an independently chaired assurance committee is particularly interesting, and we will engage with the Commission on what this might mean in practice. “

“A holistic approach is needed when considering how central government plays its part. We are pleased that the Commission is recommending consideration of a new funding stream from central government highlighting growth not paying for itself.”

“There is a heavy reliance on developers paying the lion’s share towards new infrastructure. Councils often believe growth is a bad thing and benefits only a few, however, this doesn’t recognise that everyone benefits from new infrastructure.”

“Property is the backbone of the New Zealand economy. Good, sustainable development has the potential to shape cities and enable communities to thrive. While many of the Productivity Commission’s recommendations will bring welcome change, our members believe more can be done to address system-wide failings that prevent critical investment in New Zealand’s infrastructure” says Freeman.

ENDS.

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