Watch NZH Local Focus: Rates becoming 'unsustainable'

Zaryd Wilson

Newly elected Whanganui mayor Hamish McDouall believes local authorities all around New Zealand face a fundamental problem when it comes to how they are funded.
He believes relying on rates alone may not be the fairest option.

"I could see that the rating system is fast going to become unsustainable," he said.

And he's not alone. Others in Whanganui are worried about future affordability.

Whanganui Ratepayer's Association Chair Graham Adams said that soon a large number of property owners would be rated off their properties through being unable to fund - from fixed incomes - the increase in rates charged to them.

Mr McDouall says new revenue needs to be found to fund the cost of council business, which is increasing faster than inflation.

Currently councils cannot charge rates on Crown land and one idea is that the Government make an annual payment instead of this, as happens overseas in places such as Canada.

Another idea is that a portion of GST goes to local authorities.

"There's considerable amount of Crown land right around us and not one inch pays rates," Mr McDouall said.

"It might be that you add one per cent to everyone's income tax across the board and your rates drop considerably."

Mr McDouall took this idea to the Local Government New Zealand conference two years ago and had almost unanimous support.

"It's something I might not see done during my time as mayor but you've got to start it and in 15 or 20 years when a portion of income tax is going to Local Government and there's a tiny rates bill then I'll sit back and stir my martini and go 'yeah, I started that'."

But the Government say they have no plans to review the Local Government (Rating) Act.

Made with funding from NZ On Air.