Government and Fiscal Policy

Focus on wellbeing welcome, but LG funding model remains elephant in room

Thursday October 04, 2018

Dr Ganesh Nana2

Dr Ganesh Nana

Chief Economist, BERL

 

 

Whiringa- ā -nuku 2018

 

Business and Economic Research Limited (BERL) is a privately-owned, New Zealand research-led consultancy, with a foundation of economic analysis, advice, and professional experience built over 60 years in business.

 

Our kaupapa is about people, their communities, their futures.It is no surprise therefore that we are critically aware of the central role played by local government in terms of the range of policies and decisions that affect the people of Aotearoa. And we welcome the return of the 4 wellbeings to guide and underpin such decision-making.

 

However, we also know that New Zealand and the New Zealand economy is currently sitting precariously on several burning platforms.Some are simmering, some are smouldering, but some are outright sizzling.There is, for example: climate change; the relentless march of laboratory grown meat; the increasing nationalism around the globe resulting in rising trade protectionism; the heightened questioning of the legitimacy of the economic system as growing inequality makes its mark; demographic upheaval across both age and ethnicity dimensions; provincial stresses as populations migrate to larger urban centres; the presence of cryptocurrencies, robots; and more.

 

Many look to central government for leadership on responses to these issues.However, more often than not, the implementation of policies (and management of side-effects) will be for local government to grapple with.For this reason it is critical that the relatively artificial boundary between local and central government is eliminated.Both arms of government need to be aligned towards a common objective.And the (intergenerational) wellbeing vocabulary currently being adopted by both provides a unique opportunity for such an alignment.

 

Nevertheless, the elephant in the room remains the constrained funding of local government.A shared understanding of objectives (wellbeing) is a good start. But, a clear recognition and admission from all stakeholders that the local government funding model is neither sustainable nor fit for purpose would be major progress in terms of our ability to tackle these burning platforms.With that recognition, meaningful reform of local government funding could follow.Such funding reform would enable a strong foundation for both central and local arms of government to together pursue the economic, environmental, social, and cultural wellbeing of present and future communities of Aotearoa.

 

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