Local government

We need a local government finance system that rewards councils that go for growth and punishes those that inhibit development. Our current rates system achieves the opposite – and that is what is wrong with rates.

The current local government finance system might in fact incentivise a council against development. Extra residential or business development typically costs councils money as they have to provide additional infrastructure and services to make it happen. Meanwhile, the benefits for councils are at best indirect and at worst non-existent.

LGNZ’s inquiry into local government funding makes sense. It should not stop there. In fact, what would be needed is an investigation into the role of local government, coupled with the question of how a new local government finance framework could incentivise councils to go for growth and development.

Aristotle was right. A great city does not need a big population. It can even be as small as Dunedin’s. But every great city needs a population that is passionate about itself, ambitious for its future, and optimistic about its outlook.

Should local government be recognised in the Constitution? And would such recognition make a practical difference? International experience suggests that constitutional recognition alone does not determine the practical power and influence that local government authorities can exert. A comparison of the legal situation in Germany and Switzerland provides a good illustration.

Debate about Australia’s population is framed with national aggregates and ignores how local governments deal with increased population. Part of the reason Australians are averse to more people is because local councils are ill equipped to absorb them and many are forcing residents to pay for them.

The fight between the lofty ambitions of planners and the cold hard reality of economics still rages. Politicians and planners still believe that they know better. Yet despite all their efforts they regularly fail to suspend the laws of geography and economics.

Population growth has been one of the major political debates during the past two years. However (and despite all the federal noise around population growth) Canberra is not the place where the debate belongs.