. . . What New Zealand needs is a departure from the way we finance our two tiers of government in a way that both of them are appropriately incentivised toward the goal of economic growth and development.
Imagine if both local and central government tax revenues reflected economic performance more directly.
Under such a system, we would see a different attitude of local communities to a range of activities from mining to housing.
It would provide a more balanced view to projects that at the moment would mainly be seen as a costly loss of amenity.
If Auckland could share in the increased income tax revenue that would flow to central government, Auckland could accommodate more people and this would better enable the council to finance the needed infrastructure. It would also make it easier for the council to make the case for residential development to the existing population because there would be something to be gained out of new development.
Such a system would also reduce the need for central government to intervene in local affairs. No longer would local government need to be pushed toward development because councils would be doing it out of self-interest. . . Dr Oliver Hartwich