That legislation will include measures to force councils to keep rates low, should the Government decide to go down that route. Brown has long floated copying an Australian model which pegs rates increases to a figure deemed reasonable.
“The New South Wales model is a good model. It sets a price pathway for councils that they have to keep within over a 10-year period and puts down the pressure on rates,” Brown said.
In the interim, the Department of Internal Affairs will begin publishing a yearly report on key financial and delivery outcomes, which Brown hopes will hold councils accountable.
The first will be published in mid-2025, so it will be fresh in voters' minds when they head to the polls for local body elections, scheduled for October.
The report is meant to hold councils accountable on six metrics:
- Rates – so that ratepayers know the tally of rates levied per unit, the change in rates since the previous year, and the forecast change in rates over the next 10 years.
- Council debt – including debt per rating unit, percentage change in council debt since the previous year, and forecast change over the next 10 years.
- Capital expenditure – including a breakdown by activity class such as roading and water services.
- Balanced budget – to show whether a council is balancing its budget or borrowing to support expenditure.
- Road condition – so ratepayers can compare the state of their local roads with councils across the country.
Brown will also amend the Local Government Act to remove the “four wellbeings”, a topic over which National and Labour have been feuding for a quarter of a century, ever since the wellbeings were included in the first version of the Local Government Act in 2002.
The repeal will mark an amusing moment for NZ First, which has a vexed history of voting on the four wellbeings.
In 2002, the party voted against the Local Government Bill at its third reading, which included the four wellbeings. By 2012 that position had changed, and NZ First voted against the Key Government’s amendment bill that removed the four wellbeings from the Local Government Act. The four wellbeings are: social, economic, environmental and cultural.
NZ First managed to maintain this position when the last Labour Government took office and in 2019 supported relegislating the four wellbeings, but the position appears to have changed, with the present coalition, NZ First included, voting to repeal them again.
The party was contacted for its position. If the party supports this legislation, it will mean that in just 23 years NZ First will have voted twice for bills in support of the wellbeings and twice against them.
Brown said yesterday that he believed removing wellbeings from the act would focus local government on the “basics”. The minister said Internal Affairs had advised him that rates had increased “on average 2% faster in years when that has been in the legislation than when it hasn’t”.
The Herald asked Brown’s office for this advice but has not yet received it. The period during which the wellbeings were included in legislation included two international inflation spikes, one on the eve of the Global Financial Crisis and the other following the Covid-19 pandemic.
Brown said the wellbeings “effectively increases the scope of what councils should be focused on rather than those core basics of fixing the roads, fixing the pipes, delivering local services effectively and efficiently”.
“It increases the scope and therefore councillors vote to increase what the council is doing, which costs more money,” Brown said.
Brown offered little clarity on how councils would decide what was basic and what was not.
One area that appears to be non-core is providing social housing.
This could be a challenge for the likes of the Wellington City Council, which provides social housing to 3000 tenants through more than 1900 homes.
“If your council had a choice about whether to fix roads or build more social houses, they should be focused on fixing roads,” Brown said.
He noted that Housing Minister Chris Bishop was leading the charge for the Government to steer social housing, rather than councils.
Prime Minister Christopher Luxon, appearing beside Brown, agreed.
“There will be councils that have legacy assets and social housing or council housing – that’s fine, they need to be well managed. But what I’d say to you going forward is we’re expecting [the] Government to deliver social housing,” Luxon said.
The challenge in Wellington is that the central Government is not keen to deliver this housing themselves, but rather to deliver it through Community Housing Providers (CHPs), which are charities that collect a subsidy from the Government to deliver social housing.
In the capital, the largest CHP is Te Toi Mahana, created in 2023 to manage the Wellington City Council’s social housing portfolio. It’s the second-largest social housing provider in the city after Kāinga Ora.
This could put the council and its CHP in something of a bind. On the one hand, Brown’s directive and new legislation could steer it away from social housing, while on the other, Bishop’s CHP-focused housing efforts would suggest the Government wants the council’s CHP to get more, rather than less involved in social housing.
Labour’s Kieran McAnulty attacked the move, saying councils should not be forced to choose between roads and housing. He blamed the coalition’s repeal of Labour’s Three Waters reforms for putting pressure on rates.
“Today, Christopher Luxon and Simeon Brown stood at the podium and unironically said councils’ funds are tight, so therefore housing shouldn’t be a priority for them.
“They said they should fund roads instead of housing people. But it shouldn’t have to be either or.
“Councils are in this situation because those same ministers cancelled the Affordable Water Reforms, stopping the very solution to keep rates down, and then waited months to announce a worse plan,” he said.
Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
