![]() * Dr Patrick Carvalho is a Research Fellow at The New Zealand Initiative. It is high time local issues are paired with local solutions. Surely alternative arrangements could, and should, be in place to deal with these incentive mismatches. This situation is bad for the tourism industry but even worse for frustrated residents.ĭespite a few tourism-specific revenue streams, much of the related financial burden still rests on ratepayers, while the economic gains (again) largely flow to central government coffers. Without proper funding arrangements, local infrastructure – from wastewater to congested roads to overcrowded public spaces – fails to deliver fit-for-purpose services. Similarly, tourism has been an increasing source of funding pressure for some communities, particularly those with a small ratepayer base and a large number of visitors. Little wonder local councils are reluctant to issue pro-growth zoning plans. On the other hand, most of the fiscal gains from new housing flow directly to central government in the form of increased income and GST collections. Poor incentives lead to poor results.ĭue to rigid central rules, local governments – and by extension local ratepayers – bear much of the cost on new developments such as high upfront infrastructure charges and financial liability for any flaws in building consent. Our research since the past seven years has consistently shown that the much-vaunted housing crisis is a self-inflicted harm. Take the housing shortage kerfuffle in New Zealand, for instance. Rather than looking for preferential treatments for the unequal circumstances among local governments, we instead advocate the freedom – and responsibility – of self-determination at a local level. Any time an individual is granted preferential treatment based on race, opportunities are denied to others who may be just as qualified or needy but who simply have the wrong skin color or are. That is, self-rule should best rest at the lowest possible tier of government. In our submission delivered today, The New Zealand Initiative recommended a fresh rethink of local government through the lens of localism. Thus, it is encouraging that the Productivity Commission is inviting submissions to improve local government funding and financing. This political arrangement is counterproductive. Nonetheless, in a highly centralised New Zealand, unbending regulations are equally forced upon all communities regardless of their unequal circumstances. Life in fast-paced Auckland is as different from rural Grey District as the humming touristic Queenstown-lakes area is from quiet Gore. The ancient Greek philosopher would then have certainly condemned our local governance rules. “When equality is given to unequal things, the resultant will be unequal,” Plato once said.
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