Baldock Larry: General Debates 
Baldock Larry: General Debates 
[Volume:619;Page:14615] 
LARRY BALDOCK (United Future) 
: 
 This afternoon Parliament will have an opportunity to debate and vote on my colleague Gordon Copeland’s bill to remove GST on rates—a tax on tax. Before discussing the GST on rates issue though I want to take this opportunity to outline United Future’s policy on a number of issues that relate to local government funding. We do not consider the removal of GST on rates to be a silver bullet to solve all the financial issues facing local councils and their burdened ratepayers. It is one of a series of policies we have been promoting since entering Parliament 2 years ago this month. 
 Firstly we support increasing the financial assistance rate paid by Transfund for local roads by up to 80 percent to alleviate the burden that the cost of local road maintenance and construction places on rates and therefore on councils. In addition in the short term we will be supporting the increase for a further 5c petrol tax and a similar increase on road-user charges for light vehicles from 1 April 2005 which will be devoted entirely to the National Land Transport Fund and distributed regionally for local road construction. We made sure in negotiations with the Government that none of the 5c would be diverted to the Crown account formally called the consolidated account. 
With the announcement of the funding package for Auckland’s roads I made sure in last-minute negotiations with Michael Cullen that all the funds being given to Auckland would come from a reduction in the 18.5c currently diverted to the Crown account from petrol excise which will approximately equate to a 3c reduction. We will continue to push for another 2c reduction to enable the increase in the financial assistance rate I mentioned earlier. In that way motorists would see a matching of a 5c increase with a 5c reduction in the amount diverted. 
We support and will be arguing for a review of the rates rebate level to assist those on fixed incomes. We applaud the initiative of those councils that have also prepared plans for enabling some ratepayers to defer rate payments on their estates which enables them to remain in their properties in circumstances where they are asset-rich but cash-poor. 
We are also supportive of the concept of central government sharing a percentage of GST revenue with local authorities on a regional basis in a similar way to the new road revenue. I do not mean charging GST on rates and then giving that revenue back to councils. No that is a tax on tax and it is wrong. The Government cannot be trusted if it collects that tax because in a fiscally lean time the Government will take it away again—as happened in the beginning when GST was first imposed upon rates. It was to be given back to councils but that promise was broken very quickly which is why we find that the Hon Peter Dunne has now changed his mind on the issue. 
We are talking here about central government sharing a percentage of the general GST it collects—perhaps as much as 1 percent—reallocating that to the communities it came from; and setting that process by legislation. One percent of current GST from that tax’s annual revenue of $9.57 billion for the year ended 2004 would amount to approximately $95 million to assist local councils in the burdens they must face. We agree there may need to be some parameters around that funding such as limiting it to infrastructural projects and not to operating expenses. That debate is something we can have in discussion with the Government when this proposal is fully put on the table and restrictions can be listened to that will make sense in that regard. 
Indications from the Government that consideration is being given to assist small councils with large infrastructure projects such as sewerage and water treatment would also have the support of United Future. 
All this is necessary because we entirely agree that local government has been given more and more responsibility over recent years—without any additional funding except that which it raises primarily from property owners—and that is not just with the introduction of the new Local Government Act. That Act actually helps by giving a new power to councils to take subdivision impact fees which enables councils to spread the costs of providing new amenities for our communities to new homeowners as well as existing ratepayers. But there are limits as to how far that power can be extended without it having a negative effect on the cost of housing particularly for new families and first-time buyers. 
It was precisely because of all the concern about the increased costs to local government that could be brought in by the new Act that I negotiated with the Minister for Local Government Chris Carter for a review of the Act to be done by the Local Government Commission in 2007 and for recommendations to be given to the Minister even as early as 2005—before the next national elections—if there were areas of concern. I think there are already sufficient areas of concern for that inquiry to begin now.