Implementing the 2012 Amendment Act

The first phase of the Better Local Government programme culminated in legislation that was passed in December 2012.  This amended the Local Government Act 2002 to provide for:

Most of these changes came into effect as soon as the Act was passed.  The new mayoral powers apply from the October 2013 elections. 

The financial prudence requirements are to be set by regulation. The work to develop those regulations is underway, in consultation with Local Government New Zealand.

Local government reorganisations are dealt with by the Local Government Commission, in accordance with the new procedures in the Act.  Further information on these procedures, including how to make an application, and the status of current applications, can be found on the Commission’s website: 

The new purpose statement

The purpose of local government, as defined in the Act, continues to be to “enable democratic local decision-making and action by, and on behalf of, communities”. This hasn’t changed.

The second part of the purpose of local government is now: “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”.

The change focuses local authorities on doing the things only they can do, and do well. It encourages them to reduce red tape and compliance costs, minimise rates, lower debt, and provide high quality infrastructure in a cost-effective way.

The new Act reinforces that local government acts on behalf of its communities and works with them to decide what local services and infrastructure will be provided and at what cost.

The new purpose statement encourages local authorities to take a fresh look at what they are doing and why, and to seek guidance from their communities about what they want from their council now and into the future.

Financial prudence regulations

The regulations will encourage greater financial discipline in the local government sector, and will meet concerns about rising rates and council debt. They will foster a culture of continuous improvement across the sector, and showcase best practice and excellence in local authority financial management. The regulations will also provide information about councils’ financial health. They will make it easier for ratepayers to assess their council’s financial state and will promote better financial decision making.

The Local Government (Financial Reporting and Prudence) Regulations 2014 have been approved by the Executive Council and are now gazetted.

Governance arrangements

 There are three planks to the new governance provisions: a menu of assistance or intervention options for the Minister of Local Government, some changes to Mayoral powers, and a number of smaller changes to governance arrangements.

Menu of assistance or intervention options

There is now a “menu” of ways the Minister can step in to help councils deal with crises – or avoid them altogether.

The menu of options only applies to local authorities – if there is an issue with a council-controlled organisation it will be up to the relevant council to manage that.

The menu provides for six powers: request information from a council, appoint a Crown Review Team, appoint a Crown Observer, appoint a Crown Manager, appoint a Commission, or call a general election.

The Minister has published, in the NZ Gazette, a list of matters to be considered when deciding whether assistance or intervention is required. Councils can also ask for help. These changes mean central government can give councils the right level of help at the right time to meet the nature and seriousness of problems, and before situations become critical.

Request information

This is a new power under which a council would be asked to give the Minister information about a problem and the steps that are being taken to deal with it.

Appoint a Crown Review Team

This power is based on an existing power. It means the Minister can appoint a Review Team to investigate a significant problem in a council, make recommendations about how to address it and, if necessary, recommend further action to the Minister.

Appoint a Crown Observer

This is a new power and is based on voluntary initiatives that have been agreed between the Government and a council in the past. A Crown Observer would be appointed to monitor a council’s progress on addressing a significant problem, help the council address the problem and, if necessary, recommend further action to the Minister.

Appoint a Crown Manager

This is a new power under which a Crown Manager would be appointed to direct a council to the extent needed to resolve a significant problem and, if necessary, recommend further action to the Minister.

Appoint a Commission

This is an existing power where a Commission can be appointed to perform and exercise a council’s responsibilities, duties, and powers. Under this power the Minister can postpone the next local election.

Call a general election

This is an existing power, under which the Minister can dismiss a council and call a general election. This would happen if a council is unable or unwilling to perform its functions or duties.

Mayoral powers

Mayors will have a greater ability to lead their council, but this is tempered by powers of full councils. Council decisions and policies must be made by the majority of council members and councils can disestablish a committee established by a mayor, or remove any chairs the mayor has appointed.

And while the new governance arrangements will apply to Auckland, the Auckland Mayor already has enhanced powers similar to those being made available to other mayors.

The new powers are not available to regional council chairs as they are not directly elected by voters.

There is more detail about this in the Mayoral Powers Fact Sheet.

Other governance arrangements

Councils can now set policies on staff numbers and their pay; must review those at least once every three years; and must include information on the number of staff employed by salary bands in their annual report. These changes will make it easier for councillors to control council labour costs and informs ratepayers about these costs for their council.

Reorganisation process

Under the new process, anyone can apply for a local government reorganisation providing they can show there is community support, identify the rationale for change, and explain how the proposed option promotes good local government.

The Local Government Commission’s role and responsibilities have changed. An important part of the Commission’s role is to decide which of the options best promotes good local government in a particular area.  This will involve considering whether the available options achieve the purpose of local government and aid improved economic performance.  The Commission’s preferred option will then be turned into a draft proposal and issued for consultation with communities.

A petition signed by 10 per cent of affected electors in any affected district can demand a poll on a final reorganisation proposal. There will be 60 working days to prepare a petition.  If a poll happens, the result will be determined across the whole area affected by the proposal.

The Act now provides clarity about the transition arrangements that will apply if a proposal goes ahead.  For example, transition bodies will be set up to work with the Commission while it prepares reorganisation schemes.  These bodies will include people from the affected councils, ensuring there is local input into the detailed schemes.

Further information about the new procedures, including how to make a reorganisation application, is provided on the Local Government Commission’s website:

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