Looking at Alternative Funding instead of more Rates

Welcome to the Talking Auckland ‘The Weekend Analysis’ podcasts where I look back at a hot button issue that has concerned Auckland over the last week. In this Weekend Analysis I look at alternative funding Auckland Council should be exploring rather than going for the cop out continuous Rates rises we currently get.

The Weekend Analysis on Alternative Funding for Auckland Council:

Reference Links

NZ Herald:

Brian Rudman: Think and take the squeeze off

Quoting from the Rudman:

Would Auckland be any less “liveable” if Mayor Len had cut his wishlist back a little? Or investigated new forms of funding which don’t involve the easy option of squeezing the ratepayers harder?

If he’s short of ideas, a good place to start would be the latest “issues paper” of the Productivity Commission, “Using Land for Housing”.

The commission is inquiring into the supply of land for housing at the behest of the Government. It backgrounds how over the past decade, “housing supply has struggled to keep pace with demand,” suggests some solutions and seeks feedback.

While housing and related infrastructure is only one of the issues confronting Auckland councillors, the Productivity Commission does mention some alternative funding tools that might save the ratepayers from yet another turn through Len’s wringer. It notes the struggle councils, particularly in high-growth areas, have to fund the large scale infrastructure investments needed to meet the needs of future generations and sustain economic growth. Its interest is when funding shortfalls “are a barrier to the development of land for housing …”

The report points to a Texas device called Municipal Utility Districts (MUDs), where finance for new municipal services is raised through the public sale of bonds. The MUD can levy taxes on properties to pay back the principal and interest on the bonds.

Another suggestion is a “betterment tax” — in Singapore where it is widely used, it’s called a Development Charge.

It’s a sort of capital gains tax, which gives back to the community any uplift in land values that may occur after a public infrastructure investment nearby. It also taxes developers who add value to an existing development.

The commission report suggests “the appreciation of land values following rezoning could also be captured through a betterment tax” and notes, rather wistfully, that under the 1926 Town Planning Act, New Zealand local authorities could impose a 50 per cent betterment tax, but that this was repealed in 1953. What a pity.

We learn that “both Hong Kong and Singapore use betterment taxes as the principal sources of funding for transport infrastructure including their respective metro systems”.

Yet all our politicians can come up with is expensive and complicated motorway tolling systems and increased rates from captive property owners.

………..

Bob Dey:

3.5% average Auckland rates rise now proposed

Talking Auckland:

The Mayor Replies To My 10 Questions On Transport

My Alternative Funding Package for Auckland’s Transport Projects