Govt Unveils Reforms to Refocus Councils on Essential Services and Fiscal Responsibility

New Measures Aim to Rein in Rate Increases, Improve Accountability, and Enhance Local Governance.

The Government has announced a series of reforms to refocus local councils on delivering essential services, maintaining core infrastructure, and improving financial accountability. These changes come as homeowners face the steepest rate increase in over 20 years, Local Government Minister Simeon Brown has said.

“Rates are out of control, and the Government is taking action to ensure councils excel at the basics—fixing pipes, filling potholes, and delivering reliable local services—without burdening ratepayers with unnecessary costs,” Mr Brown stated.

The reform package is designed to streamline council operations and improve transparency while ensuring ratepayers receive value for money.

Key Elements of the Local Government Reform Programme:

Removing the Four Well-Beings: References to the "four well-beings" in the Local Government Act 2002 will be eliminated, refocusing councils on core services and infrastructure.

Introducing Annual Benchmarking Reports: Starting in mid-2025, the Department of Internal Affairs (DIA) will publish annual reports on council performance. Metrics will include rates levels, debt levels, capital expenditure by category, road conditions, and budget balances.

Modernising Outdated Rules: Legislative changes will remove requirements such as newspaper notices, improving efficiency and reducing costs for councils.

Improving Financial Oversight: Councils will face enhanced scrutiny to ensure their spending aligns with community priorities and avoids duplication with central government roles.

Preparing for Elections: Benchmarking reports will be published before the October 2025 local elections to provide voters with clear insights into council performance.

Enhanced Reporting and Accountability:

The benchmarking report will feature:

Rates Data: Levels, annual changes, and 10-year forecasts.

Debt Statistics: Debt per ratepayer unit, annual percentage changes, and projections for the next decade.

Capital Expenditure Details: Breakdown by activity class (e.g., roads, water).

Balanced Budget Tracking: Indicators showing whether councils are operating within their means.

Road Conditions: Comparisons of road quality between councils.

Future benchmarking reports may also compare contractor and consultant expenditures to identify potential cost savings.

Additional Reforms and Long-Term Plans:

In 2025, Cabinet will consider further measures, including:

Exploring rates pegging, similar to systems in New South Wales, Australia.

Reviewing audit requirements to reduce compliance costs.

Establishing a written question system to enhance councillor access to information.

Reforming council codes of conduct to improve governance.

These reforms complement existing initiatives such as the Local Water Done Well programme, which supports affordable and reliable water services without unsustainable rate hikes.

Focus on Responsible Spending:

“Evidence shows that including the four well-beings in the Act contributed to about 2% higher rates growth annually,” Mr. Brown explained. “Removing them sends a clear message that councils must focus on roads, rubbish, and reliable infrastructure. Communities deserve value for money, not extravagant projects that fail to deliver.”

As councils prepare their next annual plans, the Government is urging local bodies to scrutinize every dollar spent. “This reform package provides councils with a clear direction. It’s time to prioritize efficiency and affordability for the benefit of all ratepayers,” concluded Mr. Brown.

The legislative amendments are expected to be introduced in mid-2025 and passed by the end of the year, marking a significant step toward a more effective and affordable local government framework.