Employers and Manufacturers Association (EMA) Northern - One positive for business in draft Productivity Commission report

One positive for business in draft Productivity Commission report

26 Oct 2020
The EMA is pleased the Productivity Commission’s draft Local government funding and financing report recommends doing away with differential rating for business, and giving councils tools other than rates to raise revenue.

EMA chief executive Brett O’Riley says business has always paid a disproportionate share in rates in Auckland through the differential – more than double the residential rate - and this recommendation more fairly targets those that benefit most.


The EMA has never supported the argument that councils use to justify the business differential, that unlike households they can claim back GST paid on rates and claim rates as an expense to reduce their income tax liability.


Mr O’Riley says the EMA agrees with the Productivity Commission report that high-performing local government is vital for community wellbeing, and that good performance by councils should be incentivised to ensure the best outcome for everyone.


“We agree that there should be more transparency in the way local councils raise their revenue, and that with the key role they play in enabling productivity more measureable outcomes and accountability is needed,” he says.


In particular in Auckland, new funding tools are needed to address cost pressures created by infrastructure to support rapid urban growth - otherwise the current social and economic problems will continue to create inequalities. 


“Special Purpose Vehicles to help finance new development seems to be a logical solution for councils at their debt limits, and we have seen an excellent example of this in our region with the Milldale development at Wainui,” says Mr O’Riley.


“That seems to be a really good model for the future, but we must ensure that as well as infrastructure basics such as electricity, water and roading, we make sure everything that makes a housing development into a true community – parks, walkways, cycleways, access to facilities and services – are also factored in.”


The EMA will now formulate a detailed submission for the Productivity Commission on the draft Local government funding and financing report.

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