Home | About Local Government | Local Government Legislation | Local Government Act 2002

Local Government Act 2002

The Local Government Act 2002 provides the general framework and powers under which New Zealand's 85 democratically elected and accountable local authorities operate. The Act consists of 12 Parts and 20 schedules (see Appendix 5). In brief, the legislation sets out-

The purpose of the Act is to provide for democratic and effective local government that recognises the diversity of New Zealand communities; and, to that end, this Act - (a) states the purpose of local government; and (b) provides a framework and powers for local authorities to decide which activities they undertake and the manner in which they will undertake them; and (c) promotes the accountability of local authorities to their communities; and (d) provides for local authorities to play a broad role in promoting the social, economic, environmental, and cultural well-being of communities, taking a sustainable development approach.

Part 1, section 3

The purpose of local government is - (a) to enable democratic local decision-making and action by, and on behalf of, communities; and (b) to promote the social, economic, environmental, and cultural well-being of communities, in the present and for the future.

(Part 2, section 10)

Part 1 of the Act clarifies that local authorities do not have Treaty of Waitangi obligations under the LGA (those responsibilities lie with the Crown), but Part 6 of the Act includes provisions for local government to consult with Māori and involve them in decision-making processes.

Purpose of the Act

The purpose of the Act is stated in Part 1, section 3. The Act is designed to provide democratic and effective local government that recognises the diversity of New Zealand communities. It aims to accomplish this by giving local authorities more general powers and more flexibility to decide what they will do and how.

To balance this empowerment, the legislation promotes local accountability, with local authorities accountable to their communities for decisions taken.

The Act also enables local authorities to play a broad role in promoting community well-being, taking a sustainable development approach.

Purpose and role of local government

The Act also provides a clear purpose for local government (Part 2, section10). This purpose recognises that local authorities are able to provide community governance at the local level and make a significant contribution to social, economic, environmental and cultural well-being.

The Act provides local authorities with "full capacity" to undertake activities and "full rights and privileges" for the purposes of undertaking those activities (Part 2, section12). This means that they have the same rights and freedom of action, consistent with the general law, as individuals and corporations. However, those powers are subject to the other provisions of the Act, that impose some specific prohibitions, limitations, and requirements that are considered necessary as limits to those general powers, including requirements for consultation and accountability. The powers are also limited by other Acts.

One effect of the move to the more broadly empowering framework is that it is no longer necessary for the law to specifically and prescriptively give councils powers to do things that other people may lawfully do under the general law. This has enabled the law to be streamlined, although it has not negated the need for powers that go beyond the general powers (such as coercive powers) to be specified in statute.

The general powers apply equally to regional councils and territorial authorities. To avoid services or functions being duplicated, the Act requires all local authorities within a region to agree to protocols for communication and co-ordination (triennial agreements). The Act also includes a process for resolving any situations where agreement cannot be reached.

Principles relating to local authorities

Part 2, section 14, of the Act includes a series of principles local authorities must act in accordance with (see Appendix 6). These principles are intended to govern the overall actions of local authorities, and include principles relating to the conduct of business in an open and transparent manner; making itself aware of community views; providing opportunities for Māori to participate in decision-making processes; collaborating and cooperating with other local authorities as appropriate; ensuring prudent stewardship of resources; and taking a sustainable development approach.

This section also states that if any of these principles, or any aspects of well-being referred to in section 10 the Act, are in conflict in any particular case, the local authority should resolve the conflict by conducting its business in an open, transparent, and democratically accountable manner (the first principle in section 14).

The main changes introduced by Parts 4 to 6 of the Act that are being considered by this evaluation are described in the following paragraphs.

Governance and management of local authorities

Part 4 of the Act provides principles for the governance and management of local authorities. These principles and other provisions are intended to ensure that elected members are responsible, open, transparent, and democratically accountable in their decision-making, as well as making clear the role of the chief executive. Part 4 introduces a new requirement for the preparation of a local governance statement that includes information on the conduct for elected members, including a new requirement for local authorities to adopt a code of conduct, information on the electoral system and representation arrangements, and key council policies and structures.

This Part also specifies the constitution and purpose of community boards, introduces easier processes for disestablishing community boards and requires systems to be in place for giving advice to community boards.

Governance and accountability of council-controlled and council organisations

Part 5 provides a governance and accountability framework for a local authority’s involvement in arm’s-length organisations. The Act enhances the previous legislation by providing a comprehensive framework that applies to all forms of arm’s-length entity. Arm's-length entities are accountable to the local authority for their performance, and the local authority is, in turn, accountable to the community for both the local authority’s involvement with the arm’s-length entity and the performance of the arm’s-length entity.

Planning

Part 6 of the Act promotes greater accountability between local authorities and their communities and a long-term focus for the decisions and activities of the local authority. It includes a new requirement for local authorities to facilitate a process with their communities, at least every six years, and to identify community outcomes for the intermediate and long-term future of the district or region. The role of the local authority is to facilitate the process, with the community having ownership of the identified outcomes.

Identifying community outcomes is designed to promote better co-ordination and application of community resources, and inform and guide priorities for activities undertaken by local authorities and other organisations. The local authorities' role is to facilitate the contribution other local authorities, government agencies, local organisations and the business sector make to the outcomes and priorities identified by the community.

Local authorities can decide what processes to use to identify and prioritise community outcomes but they must ensure that the processes encourage the community to contribute. They also must, before deciding on the process, identify other organisations and groups capable of influencing either the identification or the promotion of community outcomes, and, if practicable, secure their agreement to the process (section 91, clause 3).

Part 6 also requires local authorities to prepare a ten-year LTCCP, which is to be reviewed every three years. The LTCCP describes the community outcomes and priorities and the activities the local authority will undertake to contribute to the outcomes. The plan is designed to integrate decision-making and include information on the key policies of the local authority. It also describes linkages between activities and how they are funded. The first plans following the full community outcomes processes are required by 30 June 2006. Plans produced by local authorities in 2003/04 and 2004/05 followed the full community outcomes processes to varying degrees.

Decision-making, consultation and accountability

Part 6 also requires certain decisions, such as commencing a significant activity, to be undertaken in accordance with the LTCCP or by way of an amendment to the LTCCP.

Part 6 includes specific decision-making considerations for any decision that a local authority takes. The extent to which local authorities comply with decision-making requirements can be proportional to the significance of the matter under consideration. Local authorities are required to develop a policy on significance to indicate when an issue is important to the council or community. This policy includes the local authority’s general approach to significance and what criteria or thresholds the local authority may apply when considering the extent to which a matter is significant. The policy also must list the assets considered by the local authority to be strategic assets.

The Act requires local authorities to be more rigorous in their decision-making by identifying all reasonably practicable options for achieving the objective of a decision and assessing those options by considering the benefits and costs in terms of the present and future well-being of the community, and the extent to which community outcomes would be promoted. Local authorities also are required to consider the impact of each option on their capacity to meet present and future needs in relation to their statutory responsibilities.

When a local authority undertakes public consultation, it must do so in accordance with the principles of consultation set out in Part 6, section 82. In brief, these principles require councils to -

• Provide easy-to-understand summaries of proposals and plans.
• Identify who will be affected by decisions and encourage them to make their views known to the council - councils also must give reasons for their decisions.
• Find out what all the practical options are for dealing with issues and carefully assess them.

Part 6 of the Act also includes a special consultative procedure that must be used for consultation on particular issues, such as the LTCCP or a proposal to adopt or amend a bylaw.

Local authorities must ensure that they have processes in place for consulting with Māori. The Act also requires councils to establish and maintain opportunities for Māori to contribute to decision-making processes, consider ways in which they can foster the development of Māori capacity to contribute to decision-making processes, and provide relevant information to Māori. Important decisions about land or water bodies must take into account the relationship of Māori and their culture and traditions.

Part 6 includes a number of financial management provisions and requirements to adopt financial management polices. Local authorities are required to balance their budgets each year, although exceptions are permitted if a local authority resolves that it is financially prudent to do so. Financial management policies are required that set out the council's approach to revenue and financing; liability management; investment; development contributions; and partnerships with the private sector. Policies also are required for rates relief.

The financial management provisions require local authorities to manage their revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community. Local authorities are also required to make adequate and effective provision for their expenditure needs that are identified in the LTCCP. The Act requires local authorities to consult their communities about funding and financial policies. It also requires consultation on the types and levels of services councils propose and how they will be paid for, and requires councils to explain to their communities the relationship between costs and levels of service provision. The provision of, and consultation on, this information is a fundamental ingredient of the relationship between local authorities and their communities.

Local authorities are required by section 92 of the Act to monitor, not less than once every 3 years, and report on, the progress made by the community in achieving the community outcomes for the district or region. Local authorities’ intended and actual activities and performance in relation to LTCCP objectives continue to be set out in annual plans and reports. Annual reports also must state what councils have done to involve Māori in council processes.

Assessment of water and wastewater needs

Part 7 includes a new requirement for territorial authorities to make broad assessments of the needs of their communities for water, wastewater, and other sanitary services. The requirement to undertake assessments makes more explicit the responsibilities of local government in this area. Under the Health Act 1956, territorial authorities have a duty to improve, promote, and protect public health. Each council is also required to “to cause inspection of its district to be regularly made for the purpose of ascertaining if any nuisances, or any conditions likely to be injurious to health or offensive, exist in the district”.

The assessments will identify current and future needs, identification of risks to communities where reticulated water or wastewater services are not provided, options to meet future needs, a statement of the territorial authority’s intended role in meeting current and future needs and its proposals for meeting current and future demands (including proposals for any new or replacement infrastructure).

Obligation to maintain water services

Part 7 also includes provisions requiring local authorities to continue to provide water services and to maintain their capacity to provide those services. These provisions are intended to ensure continued public ownership of water services assets. An exemption to the provisions enables small water schemes that service 200 or fewer people to be closed down or transferred to their users.

These provisions also restrict contracts or partnerships involving the private sector in respect of the operation of a water service to a maximum of 15 years. Further restrictions require that the local authority retain control over pricing, management and the development of policy relating to the delivery of water services throughout any contract involving the private sector.

Other restrictions and obligations

Part 8 provides a number of coercive powers including bylaw making, enforcement and development contribution powers. It also includes some restrictions on the ways in which councils can dispose of parks, reserves and endowed land.

Bylaws

Part 8 updates and modernises bylaw-making powers. Territorial authorities are able to make bylaws to protect the public from nuisance, to protect, promote and maintain public health and safety, and to minimise the potential for offensive behaviour in public places. Specific provision is also made for the adoption of bylaws for the control of liquor in public places.

Regional councils are able to make bylaws in respect of regulating their forestry operations, parks and reserves, flood protection and control works, and water supply works.

Bylaws, and amendments to bylaws, are required to be adopted following the use of the SPC. A new requirement is for local authorities to determine, before commencing the bylaw-making process, whether a bylaw is the most appropriate way of addressing the perceived problem. A further provision provides that bylaws must be reviewed within 5 years after they are made and thereafter at 10 year intervals, otherwise they will lapse 2 years after the date by which they were due to be reviewed.

Enforcement powers

Part 8 includes specific enforcement powers relating to entry to private property, seizure of property from public or private land, powers of arrest, the appointment of enforcement officers, construction of works on private land, and powers in relation to water services and trade wastes.

Development contributions

Part 8 provides a specific power for territorial authorities to require development contributions of money or land from developers where the effect of development requires new or additional assets, or assets of increased capacity and, as a consequence, the territorial authority incurs capital expenditure to provide appropriate reserves, network infrastructure or community infrastructure.

Offences, penalties infringement offences, and legal proceedings

Part 9 establishes a number of offences relating to water meters, water races, and other matters including damage to local authority works and property. Part 9 also includes administrative provisions relating to defences against an offence, infringement notices and legal proceedings.

Powers of the Minister to act in relation to local authorities

Part 10 modernises the powers of the Minister of Local Government to appoint a review authority and, in certain circumstances, a Commissioner, to act in place of a local authority. It also allows the Minister to call an early election for a local authority, if necessary.