The government is removing four wellbeing provisions from the Local Government Act, saying councils were using them to justify spending on nice-to-haves.

The local government minister says the provisions were leading to rates increases, but Labour says there is no evidence of that.

On Monday, Simeon Brown said the government wanted local government to get back to basics, namely pipes, potholes, and core services.

"It is clear that rates are out of control. These increases are unacceptable to ratepayers, and unacceptable to the government," he said.

Brown said the wellbeing provisions (adding the social, economic, environmental and cultural well-being of communities to the statutory purpose of local government) had increased the scope of what councils were focusing on.

"We see so many examples up and down the country where councils, you know, the convention centres, the hotels that they look at, and all of these other things that they want to spend money on, and you look at the language. They use the four wellbeings to justify the decisions that they're making, and we're saying that party is over," he said.

Brown said there was evidence from the Department of Internal Affairs that showed wellbeing provisions led to about two percent higher rates growth each year.

'Complete fabrication' - Hipkins

But Labour leader Chris Hipkins said there was no evidence.

"I think it was a complete fabrication in the claims that Simeon Brown was making today. There is no clear data that shows that there is a cause-and-effect factor here," he said.

Chris Hipkins says the government is trying to blame councils for its own failures. PHOTO: RNZ / Samuel Rillstone

Hipkins said the government was pushing the blame onto councils for the consequences of its own decisions.

"One of the biggest things driving up rates up and down the country at the moment is the need to upgrade water infrastructure. The previous government had a plan in place to make sure that the cost of that was being carefully managed, that central government had a role, and that ratepayers weren't going to end up picking up the whole of the tab. This government scrapped that, and that is one of the reasons that rates are now going up," he said.

In addition to removing the wellbeing provisions, the Department of Internal Affairs would also release yearly benchmarking reports on councils, looking at a number of metrics:

• Rates - so that ratepayers know the amount 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 that ratepayers can compare the state of their local roads with councils across the country

Brown said the reports would improve transparency, and the first would be ready before the local government elections next year.

"Voters can actually directly compare their council's performance with another council and be able to make up their mind as to whether or not the councilors or the mayor are actually performing adequately," he said.

Hipkins said councils already provided detailed information about their short-term plans, long-term plans, and capital investment plans.

"This is about the government managing the politics of the fact that rates are going up because of decisions that the central government has taken, rather than because of decisions that local government is taking," he said.

The ACT Party welcomed the focus on accountability.

Celia Wade-Brown PHOTO: VNP / Phil Smith

Its local government spokesperson Cameron Luxton said New Zealanders deserved council candidates focused on respecting ratepayers and getting the basics right.

"ACT is also pleased to see real accountability to ratepayers with the first benchmarking report, so Kiwis can see how their council stacks up against others in terms of rates, debt, and spending. Some healthy competition between councils is long overdue," he said.

The Green Party said the government was punching down on councils, and that wellbeing projects were not nice-to-haves, but things like libraries, community centres, and sports fields.

"Today's announcement makes it clear that 'Luxon localism' has nothing to do with supporting local democracy but everything to do with dictating from the top down what communities should think is important," the Greens' local government spokesperson Celia Wade-Brown said.

Further work, such as looking at rates capping, which sets a maximum percentage by which a council can increase rates each year, would take a little longer.

Brown said Cabinet expected to make decisions by February, with a view to introducing legislation midway through 2025.

PHOTO: RNZ / Marika Khabazi