Government moves to curb councils' spending on 'wellbeing'
Tuesday, 15 July 2025
The Government has introduced legislation that will tighten the reins on council spending, almost a year after promising to get councils “back to basics”.
The day before the Local Government New Zealand (LGNZ) annual conference was to be held in Christchurch, Local Government Minister Simon Watts on Tuesday introduced to the House legislation that will remove from law a need for councils to consider specific “wellbeings”, require core services be prioritised and spending on contractors be disclosed.
The proposed changes were first announced by the Government when the LGNZ held its annual conference last year. Selwyn Mayor Sam Broughton, the advocacy group’s president, said councils wanted the “flip-flopping” on local government’s purpose to stop - and needed funding tools.
“The key issue facing local government isn't our purpose, it’s funding and having sustainable funding in the medium to long term, and getting beyond just rates funding councils.
“While we need closer partnership between central and local government through regional deals, funding tools need to be available, such as the GST on new builds, or the return of mineral royalties for mineral extraction … that would make a big difference.”
He said most councils already spent more than 80% of their capital expenditure on transport and water projects, but communities asked for more from councils. There was not much money left for the parks, recycling, waste collection, and swimming pools that were expected.
“The changes that we're seeing today for some of us will have little effect, because we're already operating in that environment.”
Watts said the legislation would be passed into law by the end of the year.
“We're removing the ambiguity that was in play under the prior legislation. That is a positive step for ratepayers. It's a positive step for councils.
“We've also had another layer of increased focus around financial management and also reporting and transparency requirements, alongside a number of other features. So it's a much broader bill than what was originally intended.”
He said there were too many examples of wasteful spending happening across councils.
The Government has partly attributed problematic spending on “white elephants” to the “four wellbeings” in the statutory purpose of councils under the Local Government Act.
The wellbeings — social, economic, environmental, and cultural — were reinserted by Labour into the law in 2019, after a prior National government removed them to instead focus councils on cost-effective local infrastructure and public services.
Under the change proposed by Watts, the purpose of local government will be to:
- Enable democratic local decision-making and action by, and on behalf of, communities.
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.
To support local economic growth and development.
Core services for councils are to be defined as: network infrastructure, public transport services, waste management, civil defence emergency management, and libraries, museums, reserves, and other recreational facilities.
The law change would also require councils to “foster the free exchange of information and expression of opinions by elected members”.
Also, to “foster the responsibility of its elected members to work collaboratively to set the local authority’s agenda, determine its policy, and make decisions on behalf of its communities”.
These two changes appear a response to a situation in June 2024, when Wellington City Council chief executive Barbara McKerrow was withholding information from elected councillors. Then-local government minister Simeon Brown said he was “appalled” by this.
Broughton said aspects of the legislation, such as allowing councils to extend a chief executive’s contracts by five years, were common sense.