Government lukewarm on Wellington 'City Deal'

Following a survey showing strong public support for 'City Deals' granting certain councils wide-ranging powers, Wellington City Council is hoping to convince the new Government of the merits of the idea. Shane Cowlishaw reports.

The capital’s prospects of securing a radical 'City Deal' is being viewed as lukewarm under the new Government, with Housing, Transport and Urban Development Minister Phil Twyford unimpressed about some aspects of the idea.

Newsroom revealed last year that the Wellington City Council (WCC) had begun lobbying the previous government for a unique deal that could see the Crown return GST revenue and grant the Council stronger powers to acquire development land.

'City Deals’ have been introduced in the United Kingdom and are arrangements between Government and local councils that focus on boosting economic growth in regions that show potential.

Earn-back mechanisms, the creation of special economic zones exempt from resource consent, and investment in transport and housing could all flow from any such deal. If WCC is successful in its lobbying, it would be the first deal of its kind in New Zealand.

WCC failed to gain much traction with the previous government but it is preparing to ramp up efforts with the new Government and may have support from the public.

“I’m not particularly taken by the kind of devolution dimension of the idea of the city deal when the Government hands over a pot of money like that."

Following Newsroom’s story last year, Horizon Research undertook a nationwide survey of more than 1000 people, asking about their attitudes towards a City Deal.

It showed largely positive support, with almost half in favour of the idea and 13 percent opposed. The remainder said they would need more information or did not know.

On a regional level, support was greatest in Wellington (with 54 percent in favour) followed by 50 percent in Auckland, where mayor Phil Goff has floated the idea of a rebate on rates GST as an earn-back mechanism.

Perhaps surprisingly, there was also strong support from survey respondents for granting councils extra powers through the creation of special economic zones that could see land acquisition powers extended.

Minister not taken with the idea

Despite the apparent public support, WCC’s chances of securing a bespoke UK-like deal seem slim.

Twyford said he had not asked for any advice on a City Deal and was not impressed with the idea of handing over cash to councils in that manner.

“I’m not particularly taken by the kind of devolution dimension of the idea of the city deal when the Government hands over a pot of money like that, but I do think in this general area we have to be open to different ways of doing things.”

There were, undoubtedly, "huge challenges" around infrastructure for cities, and the way these were currently being financed was not working, Twyford said.

He said it was unrealistic for either the Government or councils to fund such huge spending from their balance sheets so other options that spread the cost across the lifetime of a project needed to be explored.

These could include infrastructure bonds serviced from targeted rates in new developments, or tolls, Twyford said.

“We’re still in a fairly fuzzy stage, to be honest. We need to see where the Government lands on this thing.”

When asked about the idea of special economic zones that granted council’s wider powers, Twyford pointed to the soon-to-be-created urban development authority, or Housing Commission, that will have the necessary powers of planning and zoning.

He also said the Government was already working with WCC and Greater Wellington Regional Council on a long-term transport plan that would be jointly funded.

“I’ve said to Wellington, our Government will work with you. We can put together a 30-year transport plan with a shared programme of transport investment that we will co-fund together.

"I’ve said let’s work together on urban development ... Wellington City has done great work in this area, they’re really ahead of the game in terms of transport and urban development.”

For the Council’s part, chief executive Kevin Lavery said councillors had been briefed on plans to push for a City Deal.

“We’re still in a fairly fuzzy stage, to be honest. We need to see where the Government lands on this thing.”

He would not comment on the fine points of what such a deal could contain but said it would be better to co-design a deal with the Government’s input rather than having something rejected down the line.

Discussions were happening with the region’s other councils to develop a wider proposal but a deal for Wellington City was still a priority.

National leader Simon Bridges, the former Economic Development Minister who received several briefings on WCC’s City Deal proposal, was unavailable for comment.