Auckland councillor Penny Webster is to lead Local Government NZ's search for more cash to pay for local infrastructure and will investigate local income, consumption, and payroll taxes.

But even before Local Government NZ's funding review gets underway, the National Government has indicated it is cold on the idea of any changes, and regional taxes are not going to happen.

Increasing populations in some centres but declining populations in others were putting "severe pressure" on rates which accounted for 60 per cent of councils' income, Local Government NZ President Lawrence Yule said yesterday.

Whether it was via rates or new revenue sources, New Zealanders would have to pay more for local infrastructure such as water and sewerage over the next 10 to 15 years.


"At the end of the day if infrastructure that's required for New Zealand is going to cost more than is currently available, somebody has to pay somehow. And what we're going to have to work out is what is the fairest and most efficient way of doing that."

"What we need is something that's complimentary and we need to think outside the square."

Local Government NZ's funding review was set to get underway shortly. Ms Webster had been appointed chair of a working group whose remaining members would be announced next week.

The group will publish an issues paper before Christmas and a final report in March next year.

Mr Yule said New Zealand's local authorities had a high reliance on rates which was unusual compared with overseas where the common approach was to have "multiple taxing powers" for resilience and fairness reasons.

A report prepared last year by the NZ Initiative for Local Government NZ recommended new regional taxes or a new formula for councils to receive a share of central Government funding.

Mr Yule said those were options which would be considered, "but we're not jumping to conclusions."

"Everything's on the table."


According to Local Government NZ documents, that includes local income, consumption, and payroll taxes and visitor and congestion charges.

But Associate Local Government Minister Sam Lotu-Iiga was distinctly unenthusiastic.
"We're not open in terms of reviewing that.

"They'll go through their exercise and they'll come up with their recommendations around that and I'll have a look at that at the appropriate time."

However regional taxes would not fly.

"We're not going down that track as a Government. The Minister of Finance has been pretty clear about that."

Local Government NZ's funding review - what's under consideration:

• Local income taxes
• Local consumption taxes
• Congestion charges
• Visitor charges
• Payroll taxes