12 Sep 2017

'A perfect storm' of funding pressures for councils

8:27 pm on 12 September 2017

The country's councils are facing a "perfect storm" of funding pressures and want the next government to help them out.

Dave Cull

LGNZ head Dave Cull said councils need new income streams. Photo: RNZ

Local Government New Zealand (LGNZ) said today the bulk of council spending goes into infrastructure, but many councils were struggling to afford the cost of renewing, repairing and maintaining their drinking, storm and waste water networks to modern standards.

It follows a warning from the Auditor-General that councils were not spending enough to match depreciation or to meet their budgeted work programmes, while an an RNZ Insight investigation found 80,000 people were receiving publicly supplied water that has failed bacteria standards.

LGNZ president Dave Cull said councils would need new income streams that they could rely on, if they were going to foot the bill.

"[It] is a kind of perfect storm," he said.

"There's a need to renew, and to allow funding to renew, the infrastructure, there's a pressure to keep rates down, there's a pressure not to take on debt - and at the same time it's way more expensive to provide services.

"The whole issue of cost, affordability, revenue lines and how we're going to fund it is of primary importance," Mr Cull said.

Historically, central government funded a lot of the country's water infrastructure in a post-World War II boom or through subsidies, Mr Cull said.

LGNZ chief executive Malcolm Alexander said a lot of that infrastructure was nearing the end of its useful life and would soon need to be replaced.

Meeting rising water quality standards, and building more resilient networks made networks more expensive to replace, Mr Alexander said.

"A number of whammies are here," he said.

"In some cases it'd be easy to point fingers and say from a stewardship point of view, things could have been better, and in a number of places that would be fair.

"[But] communities are stretched from an affordability point just paying for the necessities of life," he said.

"If the community can't afford it, they can't afford it."

Mr Alexander said many councils had reached the limits of what property taxes could pay for, and a new government would have to look at alternative and sustainable revenue streams.

The current approach of competitive infrastructure grants from central government limited the ability for councils to make long term plans because the funding was insecure, Mr Alexander said.

Mr Cull said councils also wanted to partner with the government on environmental, resilience, housing, and economic development issues.

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