Auckland Regional Amenities Funding Act 2008

The Auckland Regional Amenities Funding Act 2008 was passed by Parliament on 29 August 2008. It creates a new structure for regional amenity funding.  This may only be a temporary structure. It is possible that the recommendations of the Royal Commission Inquiry into Auckland Governance may result in a different structure, such as a more powerful Auckland Regional Council taking on the role of funding regional amenities.

Promoted by Auckland Central MP Judith Tizard, the Act is designed to spread funding responsibility for regional amenities across the seven Auckland Region territorial authorities.  This is to alleviate the funding burden on Auckland City Council, which claimed it was paying an disproportionate amount of the region's shared amenities' funding .

Function

The Act specifically lists the organisations identified for funding.  They are the:

• Auckland Observatory and Planetarium Trust Board;
• Auckland Philharmonia;
• Auckland Regional Rescue Helicopter Trust;
• Auckland Theatre Company Limited;
• Coastguard Northern Region Incorporated;
• New Zealand National Maritime Museum Trust Board;
• New Zealand Opera Limited;
• Surf Life Saving Northern Region Incorporated;
• Auckland Festival Trust; and
• WaterSafe Auckland Incorporated. 

In addition to the above list, the Auckland Zoo will also receive funding subject to it first being established as a separate entity from Auckland City Council.  Amenities can be added to or deleted from the list through a notice of decision under section 20 of the Act. 

A Funding Board will be established to oversee the funding of the organisations. The Funding Board is responsible for allocation of funding to the organisations listed under Schedule 1 of the Act.  The funding is sustained by levies collected from the contributing Councils.  The levy mechanism will be gradually introduced over the first four financial years after the Act is passed.  This mechanism is briefly outlined below:

First financial year

In the first financial year immediately after the Act was passed, the formula is:

Adjusted revenue            x        Total Amount
Total adjusted revenue

The Adjusted Revenue means the total of rates (excluding rates attributed to provision of water and waste water services) a contributing territorial authority has collected in the previous financial year, multiplied by the territorial authority's differential factor in Schedule 3 of the Act.  The Total Adjusted Revenue is the combined adjusted revenue from all the contributing territorial authorities in the previous financial year.  The Total Amount is the total amount of funding allocated under Schedule 2 of the Act (including Auckland Zoo if it becomes a separate legal entity pursuant to section 43 of the Act). 

Second financial year

In the second financial year, the formula changes to:

Adjusted revenue            x        Maximum total levy of contributing authorities
Total adjusted revenue

The Maximum Total Levy of Contributing Authorities for the second financial year is $16 million dollars if the Auckland Zoo becomes a separate legal entity pursuant to section 43 of the Act, or $12 million dollars if section 43 doesn't apply. 

Third financial year

The formula for the third financial year is the same as the second financial year, but the Maximum Total Levy of Contributing Authorities increases to $19 million dollars if section 43 applies, and $15 million dollars if section 43 doesn't apply. 

Fourth financial year and onwards

From the fourth year onwards, the Maximum Total Levy of Contributing Authorities will be capped at 2% of the Total Adjusted Revenue From Rates of all the contributing territorial authorities in the previous financial year. 

The promoters of the Act are aware that the levy formula may be skewed by the inclusion of some Councils' water supply and wastewater in their rates. Accordingly, to ensure equity amongst all Councils, the definition of "revenue rates" in section 4 of the Act exempts that part of any rate that is to be applied to the provision of water supply or wastewater services. 

The fixed differential factor under Schedule 3 of the Act applied to the adjusted revenue from rates means the metropolitan Councils nearest to the facilities being funded (Auckland, North Shore, Waitakere, Manukau and Papakura) are levied a greater portion of their rates revenue than the rural Councils located further away. (Rodney and Franklin). 

While the Act affects all the territorial authorities within the Auckland region, the Funding Board is not a Council Controlled Organisation for the purpose of the Local Government Act 2002.  According to the promoters, this is to ensure that the Funding Board can fulfil its specialist role in line with tailor-made accountability. 

The National Party attempted to insert a sunset clause of no later than 1 July 2012 to underline its view that the Act is a short term measure to alleviate funding difficulties for the listed organisations. The attempt did not succeed, but party leader, John Key, nevertheless announced his party will repeal the Act if it becomes the next government. 

While the Act ensures all territorial authorities in the Auckland region contribute towards the funding mechanism, some parties, particularly the contributing Councils (excluding Auckland City Council), consider a region wide funding programme should be the responsibility of the Auckland Regional Council, both administratively and financially.  However, the promoters of the Act point out that the outcome of the Royal Commission Inquiry into Auckland Governance is uncertain, whereas the financial difficulties faced by the targeted organisations are immediate.

The funding structure, particularly the model of levying contributions from the territorial authorities, may be a reference point for future regional funding mechanisms.  The lower levy imposed on both Rodney and Franklin District Councils suggests acceptance that rural communities in the Auckland Region have lower levels of demand on such infrastructure and resources compared to the metropolitan areas. 

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Last updated: September 2008

This article is intended to be brief in nature and should be used for information only. It should not be relied on as legal advice.