When council rates rise at five times the rate of inflation, while water pipes burst and potholes multiply, something has gone very wrong.  

Council rates jumped 12% last year, the steepest increase in decades, and will on average increase 9% this year. Ratepayers are angry. No wonder there have been calls for the government to impose rates caps. 

The government’s response is the Local Government (Systems Improvements) Amendment Bill. Its intent, to refocus councils on ‘core services’ and strengthen accountability, is sensible. 

Removing the vague ‘four wellbeings’ mandate that allowed councils to justify almost any spending returns local government to its essential functions. New transparency requirements and performance benchmarking should help residents better understand what good local government looks like. 

However, the Bill’s list of ‘core services’ needs work. It captures over 80% of council spending, making meaningful prioritisation difficult.  

In our submission on the Bill, we propose a more sophisticated framework. Rather than rigid lists, councils should prioritise activities based on important economic principles: the barriers to better outcomes, the ability to charge users, and whether the function can be effectively delivered locally. This would provide clearer guidance whilst preserving flexibility as circumstances change. 

The Bill’s governance reforms are most welcome. Requiring chief executives to provide elected members with necessary information tackles a fundamental democratic deficit. Too often, officers withhold or are slow to provide information, undermining accountability and decision-making.  

Combined with standardised codes of conduct that protect councillors’ freedom of expression, these changes should rebalance power towards elected representatives. Both were recommended in my 2024 report, Making Local Government Work. 

Yet the reforms could go further. As also recommended in Making Local Government Work, Auckland’s mayoral office model should be available to all councils by providing mayors with staff accountable to them rather than the chief executive.  

Eventually, New Zealand should consider adopting a strong mayor system that combines executive and political leadership, as successfully implemented in the Germany state of North Rhine-Westphalia. 

The Bill provides necessary medicine. But rules and caps alone will not cure the patient, let alone make it thrive. The reforms need to be complemented with positive incentives (like sharing GST revenue with councils that facilitate housing development) and more democracy (like requiring ratepayer referenda for major non-core projects). 

Making local government work matters enormously for New Zealand’s future. The challenge is ensuring legitimate demands for fiscal discipline strengthen rather than weaken local democracy. 

Nick Clark's submission, Local Government (Systems Improvements) Amendment Bill, was lodged on 27 August 2025.