This policy, advocated by the New Zealand Initiative, aims to improve housing supply and affordability.<\/p>\n
The explanation lies not in planning laws but in fiscal structure. Swiss cantons and communes levy their own income taxes. Local growth means local revenue. So they welcome development rather than resist it \u2013 just like Wellington does here.<\/p>\n
New Zealand cannot simply import that model. Switzerland\u2019s system works because it is competitive. The canton of Zurich alone has more than 100 municipalities, each setting its own income tax rate. Because residents can vote with their feet \u2013 moving to a lower-tax neighbour if their council overreaches \u2013 municipalities must compete for them, keeping local taxes low.<\/p>\n
Auckland has one council serving 1.7 million people. A local income tax here would be a charge levied by a monopoly \u2013 generating revenue without competitive pressures to keep tax rates low. As a proxy for Switzerland\u2019s municipal taxes, the New Zealand Initiative\u2019s 2013 report Free to Build proposed something different: a Housing Encouragement Grant<\/a> benchmarked to the estimated GST on each new home. A direct fiscal reward for saying yes.<\/p>\n For a $400,000 house-and-land package \u2013 the going rate in 2013 \u2013 the consenting council would receive $60,000. The simpler the formula, the harder it is to game. Fix the planning rules by all means \u2013 but without fixing the incentives behind them, the rules will keep losing. <\/p>\n Once an idea that raised eyebrows, GST-sharing has quietly become orthodoxy. Act brought it to Parliament as a member\u2019s bill. The 2023 National-ACT coalition agreement committed both parties to investigate the idea. Chris Bishop, as Housing Minister, floated GST-sharing as part of his housing agenda.<\/a><\/p>\n Yet the coalition Government\u2019s first two Budgets have passed without delivering it. Now, apparently, the third will. Local Government New Zealand has calculated that sharing 50% of GST from 2024 building consents would have generated $1.3 billion for councils \u2013 enough to fund their entire rates increases for that year.<\/p>\n Payments must be automatic and formula-based, tied to consents issued or completed builds \u2013 not a contestable fund Wellington can redirect at will, and not a substitute for fiscal discipline.<\/p>\n This month, New Zealand First leader Winston Peters proposed sharing mining royalties with the regions that bear the costs of extraction \u2013 the same logic, applied to a different industry. He was right about mining. That principle may finally be arriving in housing, too.<\/p>\n GST-sharing is not the whole answer. A council with the right incentives but the wrong planning framework is still stuck \u2013 and for three decades the Resource Management Act (RMA) has made development slow<\/a>, costly and uncertain. The Government\u2019s Planning Bill is its replacement.<\/p>\n But both levers need to pull in the same direction. GST-sharing gives councils a reason to say yes. The Planning Bill must give them the room to do so.<\/p>\n For more than a decade, one part of the fix was sitting in plain sight. Councils were not hostile to growth. They were responding rationally to a system designed in Wellington. Change the system, and the answer changes.<\/p>\n On May 28, we find out whether the third time is housing\u2019s lucky charm.<\/p>\nCongested roads illustrate the immediate infrastructure pressures councils face as populations expand. Photo \/ Dean Purcell<\/p>\n
Local Government New Zealand estimated this could generate $1.3 billion for councils from 2024 consents. Photo \/ Mark Mitchell<\/p>\n