Productivity Commission inquiry

Local government funding and financing - Productivity Commission inquiry material 2018 - 2019

The Productivity Commission completed its inquiry into local government funding and financing and presented its final report and recommendations to Government in 2019.

The inquiry#

The Commission received and considered 270 submissions, held more than 75 face-to-face meetings with individuals, government and non-government organisations and firms throughout New Zealand, carried out five case studies, commissioned research and conducted in-depth analysis.

The Productivity Commission’s final report presented 78 findings and 44 recommendations.

What did the inquiry find?#

Radical reform is not required. The current rates-based system remains appropriate for New Zealand. International experience offers no clearly superior alternative.

But there are areas of significant funding pressure. These pressures are highly uneven across councils with small, rural councils serving low-income communities under particular pressure.

Targeted solutions are needed to tackle these pressures. Key recommendations include new tools to help councils fund and manage growth, and additional support from central government to help councils adapt to major pressures, such as climate change.

Councils need to lift their performance to help manage funding pressures. This includes making better use of all existing funding tools. Transparency is key, and a number of recommendations are aimed at improving the transparency of local government funding decisions and performance.

A better relationship between central and local government is essential. An agreed protocol would help end the practice of central government imposing responsibilities on local government, without appropriate funding. The Crown should also be paying for council services it receives on its properties and developments.

Regional spatial planning will better prepare councils for the future. It’s a key tool for achieving more efficient use of resources, and better coordination between councils, and local and central government.

Government response#

The final report was presented to the House of Representatives. The Government issued a response to the inquiry and how it provided input into the Ministerial Review into the Future for Local Government.

Evaluation#

An independent evaluation of the Commission's performance was undertaken with inputs from expert review, focus groups and participant survey.

Timeline#

  • Terms of reference - 16 July 2018
  • Issues paper - 6 November 2018
    • Public submissions closed
  • Draft report - 4 July 2019
    • Public submissions closed
  • Final report - 30 November 2019
  • Evaluation - 2020
  • Government response - 2020

Key documents#

Final report and Government response#

Final Report: Local Government Funding and Financing Inquiry
Doc. Date Sort ascending Creator Title
Government of New Zealand
New Zealand Productivity Commission
New Zealand Productivity Commission
New Zealand Productivity Commission

Terms of reference and issues paper#

Issues Paper: Local Government Funding and Financing Inquiry
Doc. Date Sort ascending Creator Title
Minister of Finance
New Zealand Productivity Commission
Minister of Finance

Research#

Research (externally hosted)

16 May 2019 | Milkop, Ashley; Young, Michael; Moore, David | Analysis of local government cost drivers - Sapere (srgexpert.com)

Draft report#

Draft Report: Local Government Funding and Financing Inquiry
Doc. Date Sort ascending Creator Title
New Zealand Productivity Commission
New Zealand Productivity Commission
New Zealand Productivity Commission
New Zealand Productivity Commission

Submissions#

Public submissions on issues paper - Local government funding and financing

Public submissions on draft report - Local government funding and financing

Evaluation#

Evaluation: Local Government Funding and Financing Inquiry
Doc. Date Sort ascending Creator Title
Charteris, Gus
Pickens, David