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A lack of trust and inadequate funding means there need to be many changes to local government, according to a specialist panel

Public Policy / news
A lack of trust and inadequate funding means there need to be many changes to local government, according to a specialist panel

Central government has little faith in local government, according to a new report.

It adds central government sometimes dumps costs onto local government without thinking through the impact.

These are among several sharp comments made in a new report on local government, which calls for changes such as four-year terms of office and a far more robust funding system.

“The current legislative framework for local government is highly prescriptive, reflecting low central government trust in the sector,” the report says.

The report is called He piki tūranga, he piki kōtuku, or The future for local Government, and it pulls no punches.

“Significant funding challenges constrain local government’s ability to deliver services....and there is limited capacity or resource to work with communities on complex challenges.

“These pressures are exacerbated by the unfunded mandate from central government to perform more roles without additional funding.”

The report is the final stage of a review done by a panel chaired by a retired local council chief executive Jim Palmer, which included the former deputy mayor of Auckland, Penny Hulse. The review was established by the Minister of Local Government, Nanaia Mahuta, in 2021 at the request of the local government sector.

The panel says the need for dramatic change in the way local government is run is driven by challenges that are unlikely to abate.

“Extreme weather events, persistent inequity, and low social cohesion are already affecting communities here,” the panel says in its report.

“ All of these challenges will only intensify over the next 30 years.....the current local government system is not set up for future success.

“Decisions by successive governments have marginalised local government and left it in a precarious position in terms of focus, resourcing, and viability.”

In their report, the panel makes several recommendations for improvements, including four-year terms of office and 16 and 17-year-olds being allowed to vote.

It also speaks forcefully about funding problems for the sector.

“While taxation as a percentage of GDP has risen over time, local government’s share has stayed at around 2% of GDP, even as it has increasing responsibility for delivering the public good.”

The panel wants rates to remain the main funding mechanism for councils, but it has other recommendations to boost its income.

It wants central government to pay rates on properties it owns in local Government areas. In addition, there should be an annual transfer of revenue equivalent to GST charged on rates, which is currently around $1 billion. It also wants central Government to develop an intergenerational fund to help pay for climate change. Cabinet should also have to consider the funding impact on local government of the decisions it makes.

It also wants state assistance to achieve a proper partnership with iwi, which it says it lacks at present.

To achieve this, it wants this explicitly recognised in legislation, as well as a statutory requirement for councils to strengthen authentic relationships in the local exercise of kāwanatanga and rangatiratanga.

“(The Government should require councils to …..develop and strengthen their capability and capacity in the areas of Te Tiriti o Waitangi, te ao Māori values, mātauranga Māori, tikanga, and the whakapapa of local government.”

Meanwhile, the body of the report goes on to give more some trenchant criticism of the current system.

“The local–central government relationship is strained and competitive, in part due to misalignment of operating environments and decision making processes,” it says.

“Collaboration between central and local government is inconsistent and fails to harness the strengths of both. Citizen participation in local democracy is declining, and people have lost confidence and trust in the current democratic process and institutions.

“Engagement between councils and communities is often transactional rather than relational.”

To improve this governance, the panel has several recommendations. There should be more democratic innovations, such as participatory and deliberative institutions. There should also be a single transferrable vote or STV system, lower thresholds for the establishment of Māori wards and Te Tiriti-based appointments to councils.

There should also be a new Crown department dedicated to the central–local government relationship.

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The sheer number of councils in this country is beyond ridiculous.  The regional councils should just become the major councils and have local district boards that make recommendations for their area but don't really have control.  For the number of people in each one, it makes a lot more sense IMO.


I think the change needs to be a reduction in the size, and scope of central government.  Devolution of power, responsibility and decision making.  Bureaucrat City, If we took all the bureaucrats and put them in one place, it would be the size of our 10th largest city. Labour has increased the number of bureaucrats by 90%. Why are they doing this, and is it making a positive impact to our lives?


Can't disagree with that, Fat Pat. Unfortunately the Report doesn't suggest that, in fact basically wants local government to be funded so it can join the bureaucratic gravy train. Not surprising really given the people involved in producing it...full of "inspirational waffle" and repeating the old refrain that local government has had many extra impositions thrust on it, but without the necessary funding to carry them out. I am always amazed how these folk (usually but not always lefties) seem to think ratepayers are not also that central government can fund  without raising taxes. Of course this injection of new funding will not be associated with a reduced rate take.

I suggest every MP, Councillor, and the various bureaucrats should look in the mirror every morning and tell themselves..."there are way more bright ideas than NZ could possibly afford. My job is to prioritize the 'musts' from the 'nice' and carry out our functions at minimum reasonable cost to poor suckers called ratepayers and taxpayers...usually the same people!"


Let's look at what is happening first; the 'cost' of everything is rising, as is global contention for everything.

Western civilisation, as we have temporarily known it, can no longer 'afford' itself. This is Universities no longer having a 'business model' (not helped by Stephen Joyce sucking on the public teat); this is Health no longer having a working hypothesis; this is increasing Government debt, private too; this is disintegrating infrastructure.

None of which is the fault of the management structure - it's the fault of the thinking thereof.

Ultimately, we will be doing food production and not much more, at a very local level. I suspect the useful size will be Community-Board - but it won't be that format. And, of course, the budgeting won't be in money - it will be in available materials and time, weighed up against decay/triage.

In that light, this move is an inevitable attempt to prolong the unprolongable - somewhat skewed by the attempt by prior migrants (aided by woke virtue-signalling from the Left) to grab some of the cake. The first bit is too late to work, the latter bit will work itself out - maybe not prettily....


Interesting to see the % of GDP given to local council stayed the same, then again it is often a user pays system and some councils manage resources better than others. We have had an increasing population over the last 90 ears yet the % is the same, albeit the GDP figure would have been increasing with it one would hope, but there are plenty of options that need public funding support to be viable such as public transport.