Legislation introduced to refocus councils and reduce pressure on rates

In July the Government introduced the Local Government (System Improvements) Amendment Bill (Bill). The primary purpose of the Bill is to help address cost-of-living concerns by reducing the pressure on rates. One of the key proposals of the Bill is to refocus councils on the essential services they have been setup to provide.
The Bill’s explanatory note states that rates have been rising the fastest they have in twenty years, and are forecast to rise again by an average of 15%. Although rising council costs have been the primary driver, the Government is concerned that a lack of fiscal discipline, exemplified by spending on activities that stray from councils’ core responsibilities and go beyond basic requirements, have been adding to the problem.
The Bill proposes to refocus councils on their core services by amending the Local Government Act 2002 (Act), which sets out the purpose of local government. To bring about this refocus the following changes would be implemented.
The Bill would remove all references to the 4 aspects of community well-being (social, economic, environmental, and cultural), which were to be considered in meeting current and future community needs. The four well-beings were included in the Act as enacted by Labour, then removed by National in 2012 and again restored by Labour in 2019. In the Bills first reading, Local Government Minister Simon Watts stated, “whenever the four aspects of community wellbeing are included in the purpose of local government, rates go up as councils are focused on too many things.” In the Bill’s first reading, examples were given of certain councils spending on developing their own climate response action plans, which was considered a duplication of the Government’s role, and of one council looking into building a hotel.
The Bill would replace the four well-beings, with a statement that emphasises the cost-effective provision of good-quality local infrastructure and public services.
A new section would be inserted that sets out the specific core services of a local authority, these include:
• network infrastructure;
• public transport services;
• waste management;
• civil defence emergency management;
• libraries, museums, reserves, and other recreational facilities.
In performing their role, councils would be required to have particular regard to the contribution these core services make to its communities. Councils would be required to prioritise these core services in council spending and in determining their financial management approach.
Council submissions to the Select Committee largely opposed changes to the purpose of local government, including that it is unhelpful for this to change between successive governments, which in the past has had limited impact, and comes at a cost to ratepayers.