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The LGRI (2007) recommendations to improve the financial stability of local government in New Zealand are not dissimilar to the recommendations proposed by PWC (2006) to address the infrastructure backlog problems confronting all Australian local government jurisdictions.
In more specific terms, LGRI (2007) recommended that local councils should consider greater use of debt to finance long-life assets rather than using funds drawn from current revenue streams.
One area of concern highlighted in the LGRI (2007) report lay in the purportedly unsatisfactory financial decision making processes employed in some local authorities.
The LGRI (2007) report also acknowledged that New Zealand's central government should play a more pivotal role in helping to maintain rates at affordable levels.
In sum, the LGRI (2007) recommendations had two general strands.
Although less explicit in terms of its magnitude and source, the infrastructure problem in New Zealand would seem to be more evident in network assets, particularly in local roads (LGRI 2007, p.104).
Given that rates revenue already accounts for more than half of New Zealand's local government income, further increases pose serious affordability concerns for some poorer sections of the community (LGRI 2007, p.3).
As at 2006, the 25 smallest territorial authorities are home to just 7 percent of New Zealand's total population (LGRI 2007, p.35).
Secondly, local councils could use debt instruments to borrow the requisite funding, a method suggested in several Australian state inquiries, the LGRI (2007) report, and by Byrnes, Dollery, Crase and Simmons (2008).
Against this background, it is thus hardly surprising that PWC (2006) and LGRI (2007) both arrived at similar conclusions, with the former recommending a Local Community Infrastructure Renewals Fund and the latter proposing an Infrastructure Equalisation Fund.
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