Fairer Funding

Principles:

The principles of 'fairer funding' are the same as the established principles of fair taxation - they include:

• Affordability.

• Horizontal equity.

• Vertical equity.

• Collection efficiency.

• Revenue integrity.

• Revenue predictability.

• Flexibility.

Community groups and facilities:

Too many TCC funding decisions appear to be literally unprincipled - with some parts of our community expected to cover most or all of the cost of facilities they choose to enjoy, while others are charged little or nothing.

Following the abject failure of the Commission's recent efforts in this space, there needs to be a full review of the funding policies and practices of TCC with regard to community groups and community facilities.

Rates:

For 20+ years, while every other major city chose to have commercial and/or industrial rating differentials in their rating system, Tauranga did not.

This resulted in Tauranga's residential ratepayers picking up more than 80% of the city's rates bill, whereas in the other cities they picked up less than 70% - conversely, the commercial and industrial ratepayers in Tauranga picked up less than 20% of the rates bill, while in the other cities, they picked up more than 30%.

Benchmarking Tauranga's approach with Hamilton's in 2018 showed that by not having a differential, Tauranga had, over time, failed to collect over $500 million in revenue - money it can never get back.  Updated analysis suggests that the lost revenue is now $700 million!

This started to change in 2018, when a decision was made to bring Tauranga gradually into line with its peers, to give commercial and industrial ratepayers time to adjust to significantly higher rates.

Unfortunately, the Commission, in their frantic search for funding for their many follies, rapidly accelerated the planned rate of increase, resulting in some industrial properties facing rates rises next year of 30%+.

This magnitude of increase is in my opinion unreasonable and unfair. 

Funding growth infrastructure:

Just as with rates, so with funding growth infrastructure - Tauranga again chose to use a different funding model from its peers.

In short, instead of collecting 'development contributions' (to fund the infrastructure required by the development) from developers at the time of land sub-division as other cities do, Tauranga chose to collect a significant proportion of the contributions from those who eventually built in the sub-division.

Independent analysis, and Tauranga's experience, shows that the Tauranga model results in:

• More expensive land.

• Greater developer profits.

• More expensive building costs.

• And a greater debt-burden on the residential ratepayer.

Not for nothing did a former Mayor of Western Bay of Plenty District Council say: "Developers have raped and pillaged Tauranga for years".

Unfortunately, the Commission chose to do nothing about this ongoing rort.

Is it any surprise, the Commission can count the Urban Task Force among its biggest fans!

Central government funding:

Much of the growth in Tauranga has been driven by the fiscal, monetary, and other policy (e.g. immigration) settings of successive central governments.

And while the settings bolster central government metrics like GDP, and central government revenues in the short term through the GST on both the infrastructure in the ground and the buildings above, the costs fall unfairly on Tauranga's residential ratepayers.

The consensus among independent experts is that there must be a greater contribution by central government to the costs of growth in Tauranga and other fast-growing cities.

This must be a non-negotiable part of current discussions on a possible city or sub-regional 'deal' - discussions from which the residential ratepayers are currently excluded.