Local Government New Zealand (LGNZ) wants the Government to move on GST sharing on new builds, saying it will ensure growth pays for growth and support lowering rates increases.

Stats NZ today released data showing that the value of building consents issued last year totalled more than $17 billion. Sharing 50% of the GST from this activity with councils, as signalled in the National-ACT coalition agreement, would generate $1.3b for city and district councils to invest in core infrastructure that supports growth.

“Growth comes at a large cost for communities who have to pay for infrastructure up front, with all of the benefits of growth currently accruing to central government in the form of GST, new income tax and business taxes,” says LGNZ President Sam Broughton.

“The Government wants growth to pay for growth, and we agree. GST sharing is a way for Government to achieve its housing objectives and unlock local government’s key role in supporting new housing development with necessary infrastructure.”

A GST-sharing scheme for new builds would see the Government share a percentage of the GST collected from new housing developments with the council that issued the building consent. This would help those city and district councils to cover infrastructure costs associated with new housing developments such as roads, water and wastewater infrastructure.

“Last year’s share of $1.3 billion would have been enough to fund councils’ entire rates increase from 2023-2024, and would’ve enabled a decrease in rates in some regions. And already this year the sum would’ve been over $191m.

“GST sharing on new builds is something that LGNZ has long advocated for, as it is one of the tools we know can make a difference for growth councils; it also has the strong potential to help keep rates low.”

Sam Broughton says that local and central government are aligned in wanting to both limit rate rises and build more houses more quickly.

“Local government plays a key role in delivering the infrastructure needed as our regions grow. But while the bulk of the infrastructure risk and costs associated with supporting new housing developments is borne by the existing ratepayers, there is no return on this risk and investment.

“This policy would provide a return on future infrastructure investment and be a huge incentive for communities to support housing growth in their area.”

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