Local government is in crisis. The numbers tell the story: local authority rates increased 12.2 per cent in the 12 months to the March 2025 quarter – a 14 per cent contribution to the 2.5 per cent annual increase in inflation. As a result of the reckless spending of local authorities, interest rates are staying higher for longer, with all New Zealanders paying the price.
So why have local authorities gone off the rails?
To answer that question, we need to cast our mind back to the reforms introduced by Helen Clark’s Labour government. Under the guise of enabling local authorities ‘to better serve their communities’, the Local Government Act 1974, which had kept councils focused on delivering essential services and maintaining infrastructure, was replaced by the all-empowering Local Government Act 2002.
This transformed local authorities from prioritising the basics, to becoming all things to all people with a resulting blow-out in costs.
Three changes in particular unleashed a cascade of unintended negative consequences.
The first was the introduction of a new ‘purpose’ clause in Section 3 that released local government from its prescriptive constraints by requiring councils “to promote the social, economic, cultural and environmental wellbeing of communities”.
The second, in Section 12, released councils from their funding constraints by giving them the powers of general competence.
And the third change replaced colourblind legislation with provisions to privilege Māori through the inclusion of special Treaty rights, along with the option of establishing Māori wards.
The passing of the new law revolutionised local government. Recognising the opportunity provided by the wellbeings and the power of general competence to gain influence over local councils and ratepayer funding to advance their causes, vested interest groups began challenging for elected positions.
As ideologically driven radicals gained a controlling influence within councils, a literal Pandora’s box of questionable and ‘nice-to-have’ schemes emerged: state-of-the-art event centres (Christchurch’s stadium which began as a $30 million project has now escalated to $683 million); lavish council offices (Tauranga’s $125 million new office fit-out included $470,000 for coffee machines); over-the-top facilities (Wellington spent $2.3 million on a toilet block!); dubious ‘investments’ (New Plymouth spent $260 million buying farms in Australia); and expensive overseas junkets (Wellington spent $50,000 sending the mayor and four staff to Asia) – while essential infrastructure and services were neglected.
For Māori, the new legislation opened up a galaxy of opportunities to gain influence over councils – and create lucrative income streams. This was not only as a result of the potential establishment of Māori seats, but through tribal advisory groups – some with full voting rights.
A wide variety of planning and ‘partnership’ agreements began to emerge between councils and local tribal groups, resulting in a multitude of ‘sweetheart’ deals – to the detriment of ratepayers and the wider community.
In many parts of the country, tribal leaders have attempted to go further and force local authorities to take on the role of ‘Treaty partner’ with the same duties and obligations as the Crown.
That is despite councils not being Treaty partners – as was confirmed by a recent High Court case, Hart v Marlborough District Council [2025] NZHC 47, where the judge said, “Local authorities are not directly subject to the Treaty of Waitangi and its principles as they are not part of the Crown and thus not party to the Treaty.”
This means councils have no Treaty obligations at common law, beyond those stated in their empowering legislation.
Once Labour’s 2002 law was in place, as a result of the strong Māori influence, councils began attempting to establish Māori Wards – without first seeking a mandate from their local communities.
Fortunately, a safeguard had been included in the legislation by Helen Clark’s government. Because creating Māori wards modifies the voting system through the introduction of the Māori electoral roll, it represents a major constitutional change. As a result, electors were given the right to petition their council and force a binding referendum – to ensure that any decisions were being made in the best interest of communities and not in the best interest of the councillors themselves.
Between 2002 and 2020, petition rights were used to challenge council attempts to establish Māori wards on 24 occasions. Almost without exception, New Zealanders up and down the country opposed dividing their communities by race, with the result that only one poll succeeded – Wairoa in 2018.
New Zealanders did not want race-based seats and nor did they buy into the argument that they were needed to give Māori a voice around the decision-making table. In fact Local Government New Zealand confirmed that in a survey in 2019, which revealed that 13.5 per cent of elected councillors were Māori – the same as the 13.7 per cent of Maori in the adult population.
Despite there being no underrepresentation of Māori in local government, in 2021, the Ardern Labour government, without any warning or consultation, introduced retrospective legislation under urgency to abolish local government petition rights, justifying their move by claiming Māori were under-represented.
Their tapestry of lies was designed to disguise their true motivation, which was to advance their He Puapua plan for tribal rule by 2040 – a key part of which was the tribal takeover of local government.
Once petition rights were removed, powerful tribal lobby groups moved in and pressured local authorities around the country to introduce Māori wards. As a result, there was an explosion in numbers: 32 were established, leading to Māori representation on councils escalating to 21.6 per cent in 2022, with Māori now significantly over-represented in local government – just as they are in central government.
Once elected in 2023, the new coalition government swiftly changed the law to restore petition rights, requiring all councils that had established Māori wards or had planned to do so without consulting their community to either scrap them or hold a binding referendum at the 2025 election.
As a result, 42 councils around New Zealand will be running a referendum on the future of the Māori wards in October’s local body elections. If communities vote against them, the seats will be abolished from 2028.
The battle for the Māori seats is expected to become intense. Literally hundreds of thousands of dollars, if not millions, are being syphoned off most council balance sheets for projects that enrich Māori – at a cost to all other residents and ratepayers. Tribal leaders will fight hard to retain their influence.
How voters around the country vote in the referendums remains to be seen, but in the Thames-Coromandel area a recent survey of 500 residents carried out for Coromandel FM indicates that locals still prefer their communities to be united – not divided by race – with 76 per cent either against or unsure about retaining the Māori ward (48 per cent were against, 28 per cent undecided and 24 per cent in favour).
The October referenda are extremely important in the fight against racial privilege in New Zealand. Unwinding the Māori seats on local councils will send a very strong signal to our politicians – local and central – that Kiwis are fundamentally opposed to division by race.
The local body election will also provide an opportunity to identify and remove those councillors who voted in favour of Māori wards without seeking a mandate from their community. They need to be reminded that it is electors who should have the final say on how representatives are elected, not councillors.
With the ongoing Manurewa Marae voting scandal in mind, and anecdotal evidence from the last local body elections that ballot papers were ‘harvested’, concerns are now being raised about the serious potential for widespread voter fraud and corruption that is inherent in the local authority postal voting system.
The coalition needs to urgently advise what safeguards they intend putting in place to prevent the illegal manipulation of the referendum and the election.
Meanwhile, the coalition has announced a raft of changes to undo the damage done by the Clark and Ardern governments: “The local government reform programme will remove references to the ‘four wellbeings’ from the Local Government Act 2002, refocus local government on basics, avoid duplication of roles with central Government, and benchmark council performance.”
They want councils to focus back onto roads, rubbish, and reliable infrastructure.
And to help ratepayers assess the competence of their councils and hold them to account, annual reports on comparative performance will be published that will include such things as debt, capital expenditure, whether the budget is balanced, and the condition of roads.
Other measures that are also being considered to improve local government performance include the introduction of a New South Wales-style rates peg to prevent rate blowouts, along with mechanisms in the new Resource Management Act replacement to stop councils stalling on housing development, and to reduce the power of the local government planning bureaucracy, which ‘has tied New Zealand up in knots’.
Meanwhile the Minister for Regional Development Shane Jones is questioning the need for Regional Councils altogether, claiming they are not only “hobbling” economic progress, but that the overbearing influence of iwi and ‘the creeping scope of co-governance initiatives that have extended well beyond the initial intent’, have led to a deep concern that councils are “turning into some sort of iwi back office”.
ACT’s Local Government spokesperson Cameron Luxton is also concerned about the tribal takeover and would like to see a stronger emphasis on democracy in the reforms: “The moves by some councils to give unelected appointees voting rights on committees, or to create Māori wards with disproportionate voting power, are unacceptable.”
These concerns are echoed by this week’s NZCPR guest commentator, Bay of Plenty Regional Councillor Ken Shirley, a former ACT member of parliament and Labour minister:
Over recent decades the concept of Iwi partnership morphed into co-governance, which now in some people’s view, is morphing into dual or separate but parallel sovereignty. Councils are immersed in this impasse and cannot escape the challenge. Councils are both the meat and the mustard in the impasse sandwich. Sometimes reluctantly and unwittingly, but often willingly, it is councils and council staff, together with some central government departments who are driving the co-governance and separate sovereignty agendas.
Government has signalled that references to treaty principles is to be removed from some 26 pieces of legislation, including the Local Government Act and RMA derivatives. It also seems likely that the statutory requirement for cultural impact assessments for all resource consents, irrespective of relevancy, will be truncated.
At a national level Te Pāti Māori, the Green Party and elements of the New Zealand Labour Party, are actively promoting co-sovereignty. Conversely the coalition partners of the current government firmly reject co-sovereignty, are actively winding back on co-governance with most also questioning the concept of partnership introduced by the judiciary in 1987.
While the inefficiencies and cost blowouts of local government are a major concern for the coalition – and rightly so given the huge impact it has on our economy and our lives – they must not lose sight of the fact that many parts of the country local government is now effectively being run by iwi for their own benefit.
And if the coalition wants an example, they need look no further than the Northland Regional Council, where two Māori seat councillors, along with three ‘green’ councillors hold the balance of power on a council of nine. Backed by a permanent Māori Advisory Group of 21 members, along with pressure from the Northland Iwi Leaders Forum, the council has adopted “Vision 2040”, which is a local government equivalent to He Puapua. In effect, the council is being run to advance a pro-Māori agenda, and millions of dollars are now being diverted into projects for the sole benefit of Māori.
The coalition cannot ignore this state of affairs. They not only need to include in their reforms legislative provisions to remove advisory groups from councils, but they actually need to get on with the job. Dragging their feet over local government reform is unacceptable!
This article was originally published by the Centre for New Zealand Political Research.
