'Councils have lacked fiscal discipline' Local Government Minister says

RNZ News

17-07-2025

Local Government Minister Simon Watts says the bill is all about reining in costs.
Photo:
RNZ / Samuel Rillstone
Legislation making changes for councils has passed its first reading overnight, coinciding with this year's local government conference in Christchurch.
The Local Government (System Improvements) Amendment
Bill
was introduced this week, and passed its first reading on Thursday evening.
It removes the 'four wellbeings' - social, economic, environmental and cultural - from councils' purpose and imposes a series of mandatory requirements.
Councils will need to prioritise core services in spending, carry out extra financial reporting and transparency and accountability reporting, and disclose all contractor and consultant spending.
It also makes some minor regulatory tweaks, like allowing acting or interim chief executives to sign compliance certificates and extending council chief executives' second term from two years to five.
Local Government Minister Simon Watts said the bill is all about
reining in costs
.
"Councils have lacked fiscal discipline and spent far too much on the things that most people do not consider core activities of local government," he said in his first reading speech.
However, it seems somewhat at odds with the government's view of the main source of rates rises, laid out in the bill's explanatory note.
"Rates rises are being
driven primarily by rising council costs
, particularly for critical infrastructure. However, the government is concerned that rates rises are being exacerbated by a lack of fiscal discipline among councils," it said.
The coaliton partners were both offering full-throated support.
ACT's Cameron Luxton said the bill sent a clear message.
"Councils are not mini-parliaments; they are service delivery agencies. Their job is to manage infrastructure and keep communities running, and doing it while delivering value for money. When they deviate from that, and waste ratepayers' money, they increase the cost of living on all of us," he said.
ACT MP Cameron Luxton.
Photo:
Parliament TV
After arguing that transparency needed to be improved, he concluded that "democracy matters".
"If you want a say in how local money is spent, you should get elected, and this bill is working to fix that direction in New Zealand."
Former Wellington mayor Andy Foster - now an NZ First MP - said ratepayers' priorities have changed in the last three years.
"I had 30 years on a council. Generally speaking, what we heard from is people saying 'we want more services, more services, more services'.
"For the last three years we've started to hear people say in increasing numbers 'we are concerned about our rates, we are really hurting' - and people are really now afraid. They're finding it difficult to actually pay the rates and they're concerned they may not be able to stay in their own homes."
Opposition parties were all opposed.
Labour's Camilla Belich highlighted the "deep irony" of National championing a bill she said would end up "snatching control off democratically elected councils".
"What this bill says is: Wellington knows best, Wellington knows your community better than you, and the
government is going to step in
and tell your council what to do. It's a degradation of the rights of democratically elected councils," she said.
The irony, she said, was because National was "the same party that railed against Three Waters and the decisions that the Labour government was making in order to save ratepayers hundreds of millions of dollars".
Labour MP Camilla Belich.
Photo:
VNP / Phil Smith
Watts' speech had laid out that the bill would enable a code of conduct and rules for councils to be "set centrally rather than on an ad hoc individual council basis".
"This will provide greater certainty and greater consistency about behavioural standards across local government, reduce costs for councils, and ensure councillors are fully informed to make decisions," he said.
The rhetoric did seem a departure from his 2022 approach to Three Waters in opposition, where he said "the challenge is: is a top-down or centralised approach ... the right model? We don't believe it is".
However, Watts told RNZ the feedback on the bill from mayors had been positive.
"Quite a lot of positive feedback from mayors," he said. "In one way, by defining exactly what they must do means they can now have a conversation about the activities that aren't on that list, and at the moment they can't because pretty much everything fits into the wellbeing [provisions]. Overall, pretty positive. The regulatory and the relief changes in the bill take work off them and that takes cost away from them as well, so that's positive.
"Look, it's a challenging time in local government, we get that - there's a lot of reform underway, Local Water Done Well's well in train - but overall, I enjoyed my yesterday."
The previous day, Watts had been in Christchurch at the annual Local Government New Zealand conference.
Mayors at the conference had a range of views on the wellbeing provisions and whether the bill would be effective.
Far North mayor Moko Tepania pointed to the one wellbeing initiative on the council's books - a $300,000 fund for its three community boards that enabled community groups, businesses, school groups and the like to "do cool stuff in our rohe".
"That's 0.001 percent of the total operating revenue that we're putting into wellbeing initiatives. I actually think it's probably not enough money."
He said the legislation was unlikely to change much, saying councils were already spending their money on core services and the government was simply rebranding "wellbeing" as "infrastructure".
Moko Tepania (Ngāpuhi), Far North mayor.
Photo:
Layla Bailey-McDowell / RNZ
Central Otago mayor Tamah Alley agreed, saying their rates rise this year was 18.4 percent, 95 percent of which was for core services.
"We're having our communities tell us what they think are core services ... they've said museums are core services, community halls are core services, libraries are core services, they want to see some of the arts things that happen in our communities.
"I'm not sure where they think this 'over and above' spending is going. In Central Otago we don't have a lot of nice to haves ... and most of them, people are saying that's what makes living here so great."
South Waikato mayor Hamish Daine said the wellbeings had led to rates rises, but "those wellbeing are actually what's lifted the community and actually built what our community's all about".
Clutha's mayor Bryan Cadogan was confident the wellbeings had not led to rates rises.
"No. It's actually the wellbeings are just bread and butter. They're the strings that tie a community together and it's just inconceivable to me as leaders how we take that out of our community. Yeah, sure we've got a responsibility for the bricks and mortar - I get that - and at the moment we have absolutely no choice.
"We're ticking over 90 percent roads, water, and rubbish, over 90 percent. So the very little that's left is meant to hold the community together ... for years our facilities were allowed to get old, and society paid. The connection of the community and the spirit and the wanting to live there and seeing a future in the town. People turned their back and left, so you turn your back on the four wellbeings at your peril, long term."
Labour leader Chris Hipkins says "flip-flopping" is not good for councils.
Photo:
RNZ / Mark Papalii
Labour's leader Chris Hipkins supported the wellbeing provisions but not enough to bring them back if Labour wins power.
"We did return them to government previously, I guess the one hesitation I would say there is the flip-flopping's not good for councils ... so I do think we need to have a broader conversation as a country about what we want our local councils to do."
The bill will now face public scrutiny at select committee, which reports back in November.
Meanwhile, Minister Watts wants a cap on rates rises in place by Christmas - although the other coalition parties have
cast doubt on the idea
.
Councils have long complained about their inability to raise revenue that doesn't rely on rates - like a bed tax, or fees for tourists using toilets - but the government is not open to making changes which could allow that.
Ministers have previously said it's not a priority, and Watts this week said he had made clear the government will not support new taxes and revenue tools.
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