New Zealand: Short back and sides for local government - legislative reform to impact local government

Brief Counsel
Last Updated: 23 March 2012
Article by Jill Gregory

The eight-point reform programme prescribed in Better Local Government is designed to promote consensual amalgamation among, and to impose stronger fiscal and political disciplines on, the country's 78 councils.

The reforms will be advanced in two stages – a bill to be introduced in May and passed by September this year, and a second bill next year.

There will be an opportunity for submissions on the legislation.

The May Bill

The first four items in the reform agenda will be implemented through the May Bill, which the government wants to have passed in time for the October 2013 local body elections. The first three reduce the scope of council activities, expand the Auckland mayoral model to the rest of the country, increase councils' ability to keep control of wage costs and impose new fiscal constraints. The fourth is focused on reducing the barriers to council amalgamations.

  1. Replace references to the "social, economic, environmental and cultural well-being of communities" in the Local Government Act 2002 (the Act) with a new purpose of "providing good quality local infrastructure, public services and regulatory functions at the least possible cost to households and business".
  2. Set benchmarks in the Act for councils to meet in respect of income, expenditure and debt levels, these to be developed in consultation with Local Government New Zealand (LGNZ). These will be "soft caps" which will be subject to threshold tests with new powers for central government to intervene in council affairs if the a council is in breach or potential breach of the thresholds (refer to box below).
  3. Strengthen governance provisions by:
    • empowering councils to set policy on overall remuneration and limits on staff numbers (these decisions now belong to the chief executive). The CEO will remain the only direct employee of the council and will retain responsibility for employing all other staff, but within the parameters set by the council. Councils will be required to provide in their annual reports information on the number of staff employed in different salary bands
    • extending to all mayors the powers (now specific to the Auckland Mayor) to appoint the deputy mayor and the council committees and committee chairs and to propose plans and budgets, and
    • providing a graduated scale of intervention which the Minister can activate to support the new fiscal responsibility requirements or, in other circumstances, if requested by the council. The Minister can already review the performance of councils, replace elected councils with a Commissioner or call fresh elections. But these interventions are aimed more at dealing with crises than avoiding them. The new approach is designed to be more proactive.

Assistance and intervention framework

Three powers to assist

  1. Require the council to provide information about the problem and what it's doing to deal with it.
  2. Appoint a Crown Reviewer or Review Team to take over the exercise of the council's responsibilities, duties and powers, either in part or in full, and make recommendations to the council and the Minister about how to address the problem.
  3. Appoint a Crown Observer or Observers to assist the council to address the problem and/or to recommend to the Minister that he or she take further action.

Three powers to intervene

  1. Appoint a Crown Manager to direct the council's operations to the extent necessary to ensure that the problem is resolved.
  2. Appoint a Commissioner to exercise the council's responsibilities, duties and powers, either in full or in part.
  3. Call fresh elections.


Of the 11 proposals considered under the current regime, only one boundary change and one abolition proposal (Banks Peninsula) were successful. The Auckland Super City was achieved through special legislation.

The existing process requires a petition of 10% of affected electors to initiate a proposal and that the proposal be supported by a majority in each district. Proposed changes are that:

  • a poll will only be required where a petition of at least 10% of affected electors requests one, and
  • success will require majority support within the area of the proposed new council rather than in every existing district or city (although there must be "significant community support" in each of the affected territorial areas to prevent hostile take-overs).

Where no poll is required the Local Government Commission can confirm the proposal after hearing submissions and determining whether the statutory criteria are met.

In addition, the statutory criteria used by the Local Government Commission will be amended to:

  • equire that the Commission consider the benefits of the reform proposal for simplifying planning processes – a change which is intended to facilitate a shift to unitary councils, consistent with the government's preference for unitary planning documents, and
  • to put greater weight on the benefits of efficiency improvements.

Second round reforms

These will be implemented through the second Bill.

  1. Establish a Local Government Efficiency Taskforce to report by 31 October this year on the planning, consultation and reporting requirements of the Act. (The Government is known to be sceptical about the value of ten-year plans, and whether the public reads them.)
  2. Have the Productivity Commission review the balance of functions allocated to local government by central government and ways to improve regulatory performance in the sector. The Commission is to report to the government by April next year.
  3. Appoint an expert advisory group with a mix of financial, local government and engineering expertise to explore how the provision of infrastructure such as that covering the three waters, roading, footpaths and cycle ways can be made more effective. This would include ideas such as volumetric charging for wastewater.
  4. Reviewing the use of development contributions – in particular the inconsistency in application among councils, whether they are affecting housing affordability and whether they should be subject to rights of appeal. (This picks up on the Productivity Commission's work in this area, Chapman Tripp's commentary on which is available here.)

Chapman Tripp comments

The overall thrust of the reforms is to give local government a 'short back and sides' haircut in that they are designed to reduce councils' freedom of manoeuvre and to put them much more overtly under the thumb of central government.

However, although the intentions of the 2002 Act and the extension of local government's mandate to the "four well-beings" was well-intentioned, there is evidence that it may have distracted councils from their core functions and put their budgets under pressure.

It is uncertain at this stage how large the contraction in council activity will be. The Government has hung a question mark over council economic development units, saying that economic development services are provided by central government. He has said that fireworks displays fit into the discretionary category of "public services" but that councils should focus on local rather than national events – which may create problems in the future for Wellington's International Arts Festival.

Also uncertain is how much appetite there is for council amalgamations, although we are aware that this is being actively pursued in the greater Wellington area, Hawke's Bay and the Far North.

The potential demise of 10-year plans will create efficiencies by removing a laborious process from the council calendar. But it will not remove the need for local government to plan strategically over a period longer than the three-year electoral cycle. It will be interesting to see what the Efficiency Taskforce recommendations are.

Potential reforms stemming from the many reports and reviews may include:

  • the removal of some regulatory roles from local government to central government, such as setting urban limits
  • amalgamation to provide efficiency in the provision of infrastructure, and
  • the pendulum of development contributions swinging back to the Resource Management Act allowing appeals on individual projects.

It will be important for any proposed amendments in the Bill to strike the right balance between efficiency and ensuring that communities receive the right level of services from local government. We consider the changes move broadly in the right direction but if councils do not take advantage of them to engage in voluntary reform, they may find that the government (or a future government) will take further action to force their hands.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions