Government reforms and a new tax law are loading big costs on Auckland Council. Photo / File
Government reforms and a new tax law are loading big costs on Auckland Council. Photo / File
The Government is piling millions of dollars of extra costs on Auckland Council for its Three Waters and housing reforms and stripping tax credits on charitable donations.
The council has spent $1.53 million on the Government's directives for more high-density housing and more than $2m on expert advice and understanding the implications of Three Waters since the beginning of 2021.
But the sting in the tail is a new tax law. The council has spent $34,650 responding to the bill, which strips the council of charitable donation tax credits of $12m per year from the 2022-2023 financial year.
The council opposed the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters Bill), but the Government dismissed its submission by scrubbing the tax credits.
The Government's housing reforms have cost Auckland Council $1.5 million. Photo / File
The council also opposed another amendment in the bill to do with a tax issue between the council and Watercare amounting to a tax bill of $25m, but this amendment has been put on hold pending a review of the Three Waters proposal.
When it comes to the Government instructing the council to change its planning rules for greater intensification, the $1.537m bill until the end of July is made up of $1m in professional costs and $530,000 for marketing, communication and engagement costs.
The Three Waters bill of more than $2m covers work to understand the implications of the reforms, providing information to the Government, engagement with mana whenua, programme management and expert advice.
These costs are outside staff costs, which have been absorbed within council budgets.
Mayor Phil Goff said complying with major government-mandated reforms such as the housing reforms and Three Waters imposes costs on all councils, requiring staff and internal resource as well as costs associated with procuring professional services and expert advice, undertaking community and iwi engagement, ensuring public understanding of the reform and providing ratepayers with an opportunity to have their say.
"In some cases, such as the proposed plan changes for the NPS-UD and the MDRS [housing reforms], the council is legally required to notify parties directly affected.
"Some of these costs have been offset by direct Crown payments to local authorities, such as through the Government's 'better off' [compensation] package as part of its three waters reform; however, costs associated with government reforms are generally not recoverable in this way and are met solely by local authorities."
Auckland Mayor Phil Goff. Photo / Dean Purcell
The Department of Internal Affairs later confirmed to the Herald that Auckland Council will receive $128 million in Better Off funding for community projects and a further $4.3 million in support funding to assist with transition activities to be paid to by June next year.
This is in addition to $2 million paid to the council by the Department last year to meet the costs of independent advice about the Three Waters Reform Programme.
Goff said the new tax law represents an additional cost on local government, with charitable donations tax credits no longer claimable by councils.
"These additional costs add to our argument that there needs to be a wider revenue base for councils, including devolution of funding from central government such as returning to councils the GST it imposes on rates," Goff said.
When Labour-endorsed mayoral candidate Efeso Collins put forward the idea of the Government returning GST on rates to councils to tackle climate change, it was shot down by Finance Minister Grant Robertson.
He said there is no work underway to look at changes to GST on rates, saying the Government has taken action to provide certainty over longer periods on tackling climate change.
Updated: The original version of this story has been updated to reflect the funds that Auckland Council will receive in Better Off funding, and funds already received from the Department of Internal Affairs to meet the costs of independent advice about the Three Waters Reform Programme.
