Hon Simon Watts, Minister for Local Government, introduced the Local Government (System Improvements)Amendment Bill aimed at reducing pressure on council rates.
The Bill will amend the Local Government Act 2022 to:
· refocus the purpose of local government;
· better measure and publicise council performance;
· prioritise core services in council spending;
· strengthen council accountability and transparency; and
· provide regulatory relief to councils.
Refocusing the purpose of Local Government
This Bill is part of the Coalition Government’s reforms to local government announced in August 2024 which focus on reduced local government spending and delivery of core services.
Currently, section 10(1) of the LGA states the purpose of local government is to:
a) enable democratic local decision-making and action by, and on behalf of, communities; and
b) to promote the social, economic, environmental, and cultural well-being of communities in the present and for the future.
The second component of this purpose, known as the “four wellbeings”, has attracted controversy. The four wellbeings was removed from the LGA by the National Government in 2012, and reintroduced by Labour in 2019.In December 2024, the Government announced it would again remove them, with Simeon Brown (the then Minister for local government) stated they had led “to about a two percent higher rates growth each year”. Labour leader Chris Hipkins’ responded that this was “a complete fabrication”.
The Bill proposes to replace the four wellbeings with two alternative purposes:
a) to enable democratic local decision-making and action by, and on behalf of, communities; and
b) To meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses; and
c) to support local economic growth and development by fulfilling the purpose set out in paragraph (b).
This change means local authorities are required to take actions or implement measures that realise the purpose of local government.
Whilst reference to the specific four wellbeings has been removed, local authorities will still be required to consider the interests of current and future communities generally.
Another key change proposed by the Bill, is for local authorities to have particular regard to “core services” in serving its communities. The core services include; network infrastructure, public transport services, waste management, civil defence emergency management, and recreational facilities such as libraries and museums.
Measuring and publicising council performance
The explanatory note in the Bill outlines the intention of the Government to establish a council performance measurement framework similar to that established in New South Wales, with this Bill laying the “foundation” for it. Such a framework would involve the Department of Internal Affairs routinely publishing local authority performance information so that members of the public can more easily access information about the performance of their local authority.
Bill also prescribes further regulations that the Minister for Local Government is able to recommend, including for the purpose of specifying groups of activities that local authorities must plan for and report on, and for the setting of benchmarks in areas of local authority activity (that is beyond financial performance and asset management).
Prioritising core services in council spending
Under the LGA, a local authority must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings in a manner that promotes the current and future interests of the community.
The Bill proposes to add an additional requirement that when a local authority is determining its approach to financial management, it must have “particular regard” to the purpose of local government and the core services.
Strengthening council accountability and transparency
Amendments are proposed to promote public expectations of local authorities and to support elected members to effectively represent their communities.
A proposed change is the enabling of the Secretary for Local Government (who is the Secretary for Internal Affairs), to issue a code of conduct and set of standing orders that are binding on local authorities. Currently, the LGA prescribes that local authorities must adopt standing orders, it does not prescribe the content of them.
The Bill also introduces an entitlement of members of local authorities to have access to documents held by it that are reasonablynecessary to enable the member to effectively perform their duties, imparting anew responsibility on local authority Chief Executives to ensure that membershave access to such documents.
Amendments to the local authority governance principles are also outlined, so as to insert new clauses regarding the fostering of “free exchange of information and expression of opinions by elected members” and “the responsibility of its elected members to work collaboratively”.
If the Bill is passed, information on how a local authority is acting in accordance with the governance principles would need to be included in local governance statements (which are required to be made publicly available following the triennial election).
Providing regulatory relief to councils
Amendments to reduce or clarify regulatory requirements on local authorities in the pursuit of greater efficiency are included in the Bill, such as the extension of the maximum length of a chief executive’s second term (from 2 years to 5 years).
One amendment that may be considered controversial, is the removal of the requirement that local authorities must consider the relevance of tikanga Māori knowledge when appointing council-controlled organisation directors.
Next steps
The Bill is likely to be sent to Select Committee in July2025 and public submissions will be called for.
If you would like further information on the Bill, please contact Director Brigitte Morten.
