This morning Phil Goff will be interviewed on Q+A.
Goff says that one way of dealing with local government funding problems is to have the GST on rates returned to councils for them to do as they wish with.
On free speech, Goff says that he has a responsibility to ensure Auckland is an inclusive city – by excluding some speakers?
Posted by Pete George on 15th July 2018
https://yournz.org/2018/07/15/qa-phil-goff-on-funding-infrastructure-and-free-speech/
The Government has revealed an ‘unsolicited proposal’ from the New Zealand Super Fund to design, build and operate two light rail projects in Auckland.
Grant Robertson and Phil Twyford: Auckland light rail a step closer
A modern, rapid transit light rail network to transform Auckland is a step closer with Cabinet agreeing to launch a procurement process, Transport Minister Phil Twyford and Finance Minister Grant Robertson announced today.
“The Government is committed to progressing light rail to transform Auckland. It will be a magnet for private investment in urban renewal and will be able to carry 11,000 commuters per hour – the equivalent of four lanes of motorway,” Phil Twyford says.
“We are investigating innovative solutions to tackle congestion and build a vibrant and modern city.”
“The New Zealand Transport Agency will now set up a robust process to explore a range of possible procurement, financing and project delivery options. This process will invite and assess all potential proposals and report back to the Ministers of Finance and Transport. The Transport Agency will work with the Treasury and the Ministry of Transport in this process,” Grant Robertson says.
The procurement process covers both the city to Mangere and the city to North West lines. The recently announced 10-year transport plan for Auckland earmarked $1.8 billion in seed funding with the option of securing private investment in the network.
“Last month, the Government received an unsolicited proposal from the New Zealand Superannuation Fund, which proposed they would form an international consortium to design, build and operate Auckland’s light rail network,” Phil Twyford says.
“The Government will not be commenting further on the proposal other than to say that we welcome the strong interest in light rail and acknowledge that any investors will require a reasonable commercial return. The procurement process agreed by Cabinet will review all other proposals in the same way as the Super Fund’s proposal is assessed.
“It’s good to see that investors recognise this project will be a game-changer for Auckland commuters and the first step in tackling Auckland’s ever-increasing congestion,” Phil Twyford says.
This would be a variation on a public-private partnership, with in involvement in the Super Fund working alongside international investors in a consortium.
The Super Fund is a Government owned fund – that means a taxpayer owned fund. The new Government has just resumed putting more money into the fund after the National Government suspended payments when the Global Financial Crisis struck – it didn’t make sense to borrow heavily and put money aside as an investment at the same time.
The Super Fund explains it’s purpose and mandate:
In response to the challenge of New Zealand’s ageing population, the NZ Superannuation and Retirement Income Act 2001 established:
- the New Zealand Superannuation Fund, a pool of assets on the Crown’s balance sheet; and
- the Guardians of New Zealand Superannuation, a Crown entity charged with managing the Fund.
The Government uses the Fund to save now in order to help pay for the future cost of providing universal superannuation. In this way the Fund helps smooth the cost of superannuation between today’s taxpayers and future generations.
The Guardians of New Zealand Superannuation is the Crown entity charged with managing and administering the Fund. It operates by investing initial Government contributions – and returns generated from these investments – in New Zealand and internationally, in order to grow the size of the Fund over the long term.
Government contributions to the Super Fund were suspended between 2009 and 2017. In December 2017 contributions resumed, with an initial payment of $500 million planned for the financial year to 2018. From around 2035/36, the Government will begin to withdraw money from the Fund to help pay for New Zealand Superannuation. The Fund will continue to grow until it peaks in size in 2070s.
The Fund is therefore a long-term, growth-oriented, global investment fund.
So for the Super Fund to invest in Auckland’s light rail projects they would have to see them as growth orientated. This would be a financial risk, unless the Government guaranteed a reasonable rate of return.
If light rail gets superceded by other more flexible and more economic forms of transport like electric buses and cars, or if less centralised work arrangements (like working from home) become more prevalanet, it could become an expensive white elephant. The Government could end up propping up light rail to protect the Super Fund investment.
How unsolicited was the Super Fund proposal? Investing in New Zealand infrastructure projects has been proposed before – by Winston Peters.
On re-establishing contributions on 18 July 2017: Only One Party Can Be Trusted on NZ Super
“Labour, like National, has a record of flip flopping on NZ Super,” says New Zealand First Leader and Northland MP Rt Hon Winston Peters.
“No party can be trusted on NZ Super, except NZ Super’s long standing friend – New Zealand First.
“We’ll restore contributions in full to the NZ Superannuation Fund, so there will be a nest egg to cushion demand, which was the original purpose for its establishment.”
On investing in infrastructure on 28 September 2017: Cullen Fund Performs, But National Taxes It
“New Zealand First would encourage the fund’s managers to invest in infrastructure in New Zealand so it works for New Zealand’s long term interests,” says Mr Peters.
Maybe that’s where the NZ Super Fund got the idea from.
Investing in Auckland light rail will only be in New Zealand’s long term interests if it is financially viable.
Will the NZ Super Fund only consider big city projects, or will they also consider investing in regional projects?
They will need to be careful they don’t come to rely too much on local government projects. Andy investment fund should spread it’s risks.
Posted by Pete George on 10th May 2018
https://yournz.org/2018/05/10/super-fund-proposal-to-build-and-operate-auckland-light-rail/
The Ministry of Business, Innovation and Employment has forecast up to a 40% increase in tourist numbers by 2024 (that’s just 6 years away). The opportunities have been welcomed by Local Government New Zealand, but they have warned that already stretched infrastructure will be put under more pressure.
Tourism Minister Kelvn Davis: Tourism growth forecast to continue
Tourism Minister Kelvin Davis has welcomed new forecasts showing international visitor spending is expected to grow 40 per cent to $14.8 billion a year by 2024.
The New Zealand Tourism Forecasts 2018-2024 were released today by the Ministry of Business, Innovation and Employment.
“New Zealand’s tourism sector is forecast to grow steadily over the next seven years, reaching 5.1 million visitors annually by 2024, up 37 per cent from 2017,” Mr Davis says.
“We expect to see numbers climb fairly rapidly over the next two years, due to favourable economic conditions and better air connectivity, but over the longer term growth will be more moderate.
Mr Davis says a healthy tourism industry is great for New Zealand, though there is work to do to ensure the sustainability of the sector.
“It is important that the Government, councils and industry work together to meet the challenges that accompany the forecast growth.”
It’s worth remembering that John Key was Minister of Tourism for much of the last decade.
Local Government New Zealand (LGNZ): Predicted tourism boom could push infrastructure to breaking point
LGNZ President Dave Cull says that a new forecast predicting an international visitor increase of 37% to 5.1 million annually by 2024 will be a great boost to regional economies across New Zealand, however infrastructure is already under pressure and much more is needed to ensure a fair funding division is achieved between tourists and local ratepayers.
“The tourism sector is predicted to grow rapidly over the next two years, but as evidenced last summer infrastructure it is extremely stretched in many regions, with provision of public toilets, car parks and basic potable and waste water infrastructure coming at a substantial cost to communities,” says Mr Cull.
“Those communities with scale can share the burden across many rate payers, but smaller ratepaying bases are picking up big bills to accommodate visitor demand and the lack of infrastructure is resulting in tension among communities.”
Mr Cull contends that the increase in international visitor spend should be harnessed to provide tourism infrastructure.
“This is about fairness. It’s not right to burden ratepayers with subsiding the entire cost of infrastructure which is used by tourists, and there needs to be a new mechanism for tourism to support itself.”
LGNZ is advocating strongly to Government on councils’ behalf that the Government introduce a Local Tourist Tax to raise the necessary funding to meet the capital and operating costs associated with tourism mix-used infrastructure future demand, thus alleviating the financial burden on local ratepayers.
Without the necessary funding tools to ensure the needs of both locals and tourists are met, New Zealand faces the prospect of over promising and under delivering in a sector that is so critical to our economic future.
“New Zealand should be known as a high-quality tourist destination with fit-for-purpose facilities to handle the expected increase in numbers and a country that welcomes and embraces their visit.”
The forecast is both promising and challenging.
Posted by Pete George on 8th May 2018
https://yournz.org/2018/05/08/further-boom-in-tourism-forecast-infrastructure-warning/
Finance Minister Grant Robertson is thinking about a tax targeting people who will get an advantage from improved infrastructure to help fund projects like rail links.
Rather than ‘user pays’ this is ‘benefactor pays’ – but it could become contentious deciding who benefits and by how much and how much extra tax they should pay.
Would property owners who are adversely affected by new rail lines and roads get tax reductions? Property values may go up close to new railway stations, but values may go down if a property suddenly has trains whistling past them.
The very fact that property values are changed by infrastructure projects will already affect the level of rates they pay, which is already a local body tax on property.
Stuff: Finance Minister Grant Robertson considering property ‘value capture’ tax to fund rail
Speaking at the Auckland Chamber of Commerce/Massey University annual finance lunch at the Pullman Hotel in Auckland, Robertson said the Government was investigating “innovative” ways to bridge the funding gap to pay for the rail and roading infrastructure the country needs, especially in Auckland.
“Between the balance sheets of the Auckland Council and the Government, we still don’t have enough,” Robertson said.
“Minister Phil Twyford and I are actively looking at opportunities for how to do that.”
“If we are going to make big investments in things like [Auckland’s City] Rail Link, and a series of different rail links, people will benefit from that. How do we capture the value of that, and use that to fund the development?” Robertson said.
In March last year, the Productivity Commission gave an example of how that might work.
If the land value of a property benefiting from a new rail link increased in value from $100,000 to $250,000 over five years – a 150 per cent increase compared with a rise of 120 per cent in land values in the wider area – a tax could be levied on the $30,000 gain attributable to the infrastructure improvements.
The tax could be levied alongside of rates, the commission suggested.
This would amount to double taxing – increased property values mean higher rates, but this proposes slapping another tax on top of that.
Sounds very complicated, and it would be very contentious.
People who don’t use rail and don’t sell their properties will end up paying more for nothing. This is likely to particularly affect retired property owners who don’t commute and who are unlikely to move except to the cemetery – perhaps old people living close to cemeteries should be taxed higher.
Posted by Pete George on 11th March 2018
https://yournz.org/2018/03/11/possible-property-value-capture-tax-to-fund-infrastructure/
Dave Cull, Dunedin mayor and also president of Local Government New Zealand, has suggested that a regional fuel tax ”might” be something that could be used outside Auckland, both other Otago mayors have different ideas on raising more money.
ODT: Regional fuel tax might work: Cull
Dunedin Mayor Dave Cull says a fuel tax such as that proposed for Auckland may be something that could raise money for infrastructure in Dunedin, but mayors in the rest of the region have not supported the idea.
Mr Cull pointed to the Port Chalmers cycle/walkway as one project a regional fuel tax could help pay for.
He said such a tax was appropriate for funding transportation infrastructure, but other mechanisms would be more appropriate for other needs.
”Across the country there are instances where there are transportation infrastructure needs, and there’s even money within the NZ Transport Agency available, but there’s not sufficient resource in the local body to match the funding, so nothing happens.”
The cycle/walkway to Port Chalmers was an example where a lack of resources was the problem.
”That would be a candidate for that sort of funding.”
”It’s about all road users contributing to make the whole system safer and more efficient.”
It seems to be more about trying to find ways of funding projects without having to keep raising rates so much.
The amount of money spent on cycleways and the disruption to traffic is already a contentious issue in Dunedin. Hundreds of car parks in or near the CBD have been removed or are planned to be removed to make way for cycle lanes on streets, including on both main streets running right through the city.
There is low usage of the cycle lanes. I was talking to someone yesterday who was parked for half an hour on state highway one during the busiest traffic time of day, and they saw three cyclists. I daily drive on streets where all car parks have been converted to cycle lanes that are only occasionally used by cyclists, most days I see none.
I think that fuel is already quite a bit more expensive down here. Slapping a tax on it to fund pet council projects would likely be very unpopular.
Other mayors in the area want more money other than from rate hikes but not from a fuel tax.
Queenstown Lakes Mayor Jim Boult…
…said the fuel tax might work for Auckland but not for Queenstown, which had 5million visitor nights and just 16,000 ratepayers.
”Large numbers of people fly in here on aeroplanes, arriving on tour coaches, so their ability to contribute to our economy is limited through a petrol tax.”
Instead, he wanted a visitor levy, something he had said before ”constantly”.
Central Otago Mayor Tim Cadogan…
…said the area’s fuel was already more expensive than Auckland’s, so he did not support a fuel tax.
Paying for expensive infrastructure was a problem.
The planned Cromwell wastewater treatment plant had a budget of $10 million and the Lake Dunstan water supply project would cost up to $17 million.
”We’ve got 20,000 people living here; that’s pretty tough.”
Using a fuel tax to pay fore waste water treatment and water supply would be ridiculous. Cromwell is increasingly popular for tourists, and also operates as a satellite town for Queenstown and Wanaka. It is also the centre of a thriving wine region.
Clutha Mayor Bryan Cadogan…
…said local government ”needs something”, but he did not support a fuel tax.
The issue Clutha had was paying for infrastructure related to its tourism industry, which was ”not as advanced as most”.
The area had a declining and ageing population and the council could not keep going back to them for more money.
”It just seems so simple to put a tax on for tourists when they come in. We need it, and we need it now.”
Clutha District includes the Catlins area that is increasingly popular for tourists (for good reason, it’s a great area to visit).
However all these areas have different situations and needs.
Fuel is already taxed heavily in New Zealand:
We pay a total of 26 cents GST on $2 of petrol (diesel is taxed differently).
Just under a half of the cost of fuel is tax already.
It is now government policy for all of the petrol excise tax motorists pay to be directed to the National Land Transport Fund for investment back into New Zealand’s road and transport system. The AA lobbied hard on behalf of motorists for many years to have all the taxes devoted to road building and maintenance, road safety education and enforcement, and subsidies for public transport.
Previously, about 19 cents per litre of the tax motorists paid on petrol was diverted by the government to non-road and transport related projects.
For far too long there has been significant under-investment in the nation’s road and transport network, and tax diversion has been unfair and at the expense of motorists.
Motorists must not be selectively taxed or treated as an easy source of tax revenue to pay for projects that would be more fairly funded by other sources such as rates or general taxation.
We don’t support regional petrol levies that unfairly target motorists to subsidise the transport decisions of others. The future funding of public transport must not be another tax on motorists added to current taxes and charges, but has to be independently justified in terms of defined benefits to motorists.
Back to Cull:
On the Government’s commitment to reviewing local government costs and revenue, Mr Cull said LGNZ had been saying the revenue stream from rating property was not sustainable.
Perhaps it is extravagant spending wishes of councils that is unsustainable.
One could cynically suggest that mayors and councillors want to divert attention from them raising rates far more than inflation.
Our fuel is already taxed heavily. Perhaps mayors need to look more at user pays – but that’s never likely to happen for cyclists.
There’s a good case for some cycleways. A recently partly built harbour side cycleway here in Dunedin is popular and well used – mostly recreationally. One problem is the escalating cost of extending this all the way to Port Chalmers – estimates have over doubled.
Were initial estimates hopeless, or do rules and regulations and ideal requirements blow out the costs? There are suggestions that cycleway construction is lucrative because councils pay whatever it takes. The Dunedin Council wasted half a million dollars on a poorly designed cycleway that had to be redesigned and is still hardly used.
Getting sensible mayors, councillors and planners may be more important than finding ways to hide how much we are increasingly taxed and rated.
Talking of rates – they are about $2000 a year for an average house in Dunedin – how does that compare to elsewhere?
Posted by Pete George on 2nd November 2017
https://yournz.org/2017/11/02/mayors-divided-on-regional-fuel-tax/
The Government seems to have made as much noise and effort in trying to address housing problems this year than in their previous eight years in power. Housing has become both a critical problem and a critical election issue.
A new announcement yesterday: Govt sets up new housing infrastructure agency
The government is setting up a new agency to speed up the building of housing, starting with a fund of $600 million.
Crown Infrastructure Partners (CIP) will be given $300m in each of the next two years, to co-fund basic infrastructure especially, but not only, in Auckland.
The government’s named the first two projects to be considered for funding, one in Drury in Auckland’s rural south, and the other at Wainui in the city’s northern rural area.
The Drury development by Stevenson Limited could be eligible for up to $68m for roading, water and transport spending to accelerate the start of 700 homes by up to two years.
Up to $149m could be available for new roading around the Wainui area near Silverdale.
The fund is the second housing initiative in a fortnight by the government, which unveiled its $1 billion Housing Infrastructure Funds chosen projects 12 days ago.
These sorts of things and this sort of expenditure takes time to set up but one could be a little cynical about the timing.
Related to this: Immigration, tourism continuing to surge
Official figures show a net migration of a record 72,300 people in the year to June; 131,400 people arrived and 59,100 left.
For the month of June, there was a seasonally-adjusted net gain of about 6400 people – the strongest since the start of the year.
“Annual net migration has been steadily increasing since late 2012 when we had more departures than arrivals,” Statistics NZ population statistics senior manager Peter Dolan said.
Westpac senior economist Satish Ranchhod said New Zealanders were choosing to stay put.
“The number of New Zealanders moving offshore remains very low, and we continue to see large numbers of New Zealand citizens returning from Australia.
“The net outflow of New Zealand citizens is at its lowest level since 1984 … this accounts for half of the pick-up in net migration since 2011.”
While the number of new immigrants is a contentious issue a lot of the reason for the increase in net immigration is the slowdown in the numbers of New Zealanders leaving and an increase in the numbers returning.
Ironically Chinese money, builders contribute to Auckland housing construction
Chinese money or Chinese builders are contributing to almost a third of all residential construction under way in Auckland.
A top economist says that the billions of dollars of Chinese investment flowing into the New Zealand industry is badly needed.
Posted by Pete George on 24th July 2017
https://yournz.org/2017/07/24/new-housing-infrastructure-agency/
The Government went hard out yesterday promoting it’s $1 billion housing infrastructure fund. Housing has been one of National’s weaknesses heading into the election.
$1b infrastructure fund accelerates housing supply
The allocation of the $1 billion Housing Infrastructure Fund today is another milestone in the Government’s plan to increase housing supply for a growing New Zealand, Prime Minister Bill English says.
“The infrastructure projects announced today will speed up the delivery of 60,000 houses across our fastest growing population centres over the next ten years,” Mr English says.
“This is another major step forward in our plan to permanently lift the capacity of the construction sector to support a more confident, expanding New Zealand.”
The funding will be allocated across nine projects in five different council areas, Auckland, Hamilton, Waikato, Tauranga and Queenstown.
“I want to congratulate the Councils in these areas for their positive engagement with the fund and the quality of the infrastructure projects they have proposed,” Mr English says.
“These projects will make their contribution to lifting housing supply alongside the Government’s own Crown Building Project, the Special Housing Areas, our planning changes, and the already record levels of new home construction taking place across New Zealand.”
—
The successful proposals are in critical high growth areas including:
- Auckland Council – $300 million – 10,500 houses
Greenfield development (North-west) at Whenuapai and Redhills.
- Hamilton City Council – $272 million – 8,100 houses
Greenfield development (Peacockes) on southern edge of Hamilton.
- Waikato District Council – $37 million – 2,600 houses
Te Kauwhata (new development on the shore of Lake Waikare).
- Tauranga City Council – $230 million – 35,000 houses
Greenfield development at Te Tumu (eastern end of Papamoa) as well as a capacity upgrade to the Te Maunga Wastewater Treatment Plant and a new (Waiari) water treatment plant (at Te Puke).
- Queenstown Lakes District Council – $50 million – 3,200 houses
Two new greenfield sites (Quail Rise South and Ladies Mile) on the Frankton Flats and an extension of the Kingston township.
They kept the PR flowing through yesterday:
Posted by Pete George on 12th July 2017
https://yournz.org/2017/07/12/hard-out-on-housing-hand-ups/
