Zealand’s urban growth system is broken and must be revised to incentivise
cities to grow and city leaders must be given the flexibility and tools they
need to succeed,” says Stephen Selwood, CEO of Infrastructure New Zealand.
“We took 42 public and
private sector infrastructure leaders to Portland, Denver, Dallas and Houston –
four big, fast-growing cities facing the same challenges as New Zealand cities,
but with different economic, social and environmental outcomes.
“The US cities may not
be able to match New Zealand centres for liveability, but they do know how to
grow. Homes are being built, roads and public transport are being delivered and
homelessness is down by a third in the last decade.
“The key to US success is
an urban growth system which is incentivised to want growth and has the tools
and flexibility to overcome challenges.
“The metro areas of the
US, including the constituents and governments, benefit from growth. Sales and
income taxes complement property taxes. More homes, residents and investment
means more revenue for local authorities. Federal and state agencies sweeten
the deal with grants and funds to encourage performance.
“America’s thin welfare
net doubles the importance of successful urban performance – if cities don’t
grow and succeed, homelessness, unemployment and social costs fall much more
heavily on local institutions.
“Cities are not only
better incentivised, they have the ability to respond.
streams provide flexibility of funding. Innovative financing is used to
transfer the costs of infrastructure to beneficiaries who repay debt over the
long term. Regional governments evolve to meet city-wide challenges, special
purpose infrastructure districts fill resourcing gaps.
“New Zealand’s urban
growth system, by comparison, is poorly incentivised. Central government
captures the tax benefits of growth, leaving councils reluctant to invest in
costly upfront infrastructure.
“Councils that try to
grow have to rely on rates paid by those with homes in order to fund services
for those without homes. Debt ceilings constrain finance and hard regulatory
instruments become the preferred tool to manage growth.
urban boundaries and density restrictions has undermined competitive land
markets, preventing affordable housing, and there are no price signals to
ratepayers about the consequence of council policies.
“Overall, the American
system is far more collaborative, innovative, aspirational and effective at
responding to growth.
“We simply must revise
our governance responsibilities and funding. It is not working having a
multiplicity of small councils with limited capability manage limited funds for
such an important task.
“We must re-gear local
governance so that local authorities benefit from growth and have the tools to
respond. A review of local government funding and responsibilities should be
launched as part of the review of planning statute and alongside the Tax
“In the meantime,
central government has to intervene with grants and transfers, like the
Provincial Growth Fund and city and regional deals which allocate funding to
councils who support economic and urban growth.
financing costly growth infrastructure needs to shift away from ratepayers.
Activities which provide a revenue stream, including water services and toll
roads can be used to finance investment without compromising council borrowing
costs. Crown Infrastructure Partners needs to have a wider scope to finance
infrastructure delivery and rate future property owners.
“If we combine these
measures with emerging urban development authority legislation and get on with
delivering attractive new cities and centres, like a satellite city in south
Auckland, we can remove planning regulations and allow competitive land markets
to deliver housing New Zealanders can afford," Selwood says.
A full copy of the
Infrastructure New Zealand report on findings from a delegation to the USA can
be found here.
For further information and comment contact
Stephen Selwood on 021 791 209