The Government has introduced the Local Government (Systems Improvement) Amendment Bill, which is intended to make changes to council operations through a set of targeted amendments to the Local Government Act 2002. We expect the Bill will receive its first reading shortly.
The Bill follows announcements in August 2024 by then Minister for Local Government Simeon Brown, which signalled the Government's intent to review regulatory settings "…to ensure councils are delivering the high-quality core services and infrastructure Kiwis expect, in a way that is most cost-effective for households and businesses."
The changes proposed to the Local Government Act broadly seek to achieve the following:
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Change the purpose of local government: the Bill restates the purpose of local government as enabling democratic decision-making; meeting the current and future needs for good-quality infrastructure, public services, and regulatory functions in a cost-effective manner; and supporting local economic growth and development (clause 6). The Bill removes all references to four aspects of community wellbeing included in the Act by the previous government
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Better measure and publicise council performance: councils will, if the Bill is passed into law, be subject to closer scrutiny on achievement of performance measures and expenditure. The Bill requires councils to report on expenditure on consultants and contractors as part of annual reporting (clause 26). It also moves requirements relating to reporting on specified activities, financial performance, and asset management into regulations (which can be changed more easily) and expands those requirements. The Secretary for Local Government will also have the power to issue rules for reporting on performance measures, which councils would be required to comply with (clause 22)
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Prioritise core services in council spending: core services are a key focus of the Bill; if the Bill is enacted, the new section 11A will require councils to have regard to the contribution of core services to their communities when performing their functions. Core services are network infrastructure (roads, transport, and water), public transport, waste management, civil defence emergency management, and libraries, museums, reserves and other recreational facilities. Councils will need to have regard to core services when making decisions on their approach to financial management (clause 18)
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Strengthen council transparency and accountability: the Bill makes a small number of significant changes to the way councils operate, allowing the Secretary for Local Government to issue a standardised code of conduct and standing orders that are binding on all councils. The Bill also requires the chief executive to facilitate sharing council information with elected members (amendments to Schedule 7)
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Provide regulatory relief to councils: the Bill makes some minor changes to regulatory settings relating to public notice requirements, service delivery reviews, development contributions, and the maximum term for council chief executives. It also removes the requirement for councils to consider the relevance of tikanga Māori when appointing directors of council-controlled organisations (clause 16).
The policy statement of the Bill refers to cost of living concerns, and pressure on households from rates rises. The Government has previously announced it would investigate a rate peg similar to that in New South Wales (where maximum rate increases, determined through a formula, are set by an independent body, the Independent Pricing and Regulatory Tribunal). However, no such change is proposed yet.
Talk to one of our local government experts for more information about these reforms.
Co-authored by Hugo Schwarz (solicitor).
