The Department of Internal Affairs

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Local Government in New Zealand - Local Councils


Local Government Act 2002

The Local Government Act 2002 provides the general framework and powers under which New Zealand's 78 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 (Part 1).
  • The purpose of local government and the role and powers of local authorities (Part 2).
  • The structure of local government and the mechanisms for altering the structure (Part 3) - this Part also continues the role of the Local Government Commission as an independent statutory authority.
  • Principles for the governance and management of local authorities and community boards (Part 4).
  • A governance and accountability framework for local authorities' involvement in arms-length organisations - council-controlled organisations and council organisations (Part 5).
  • A framework for consultation, planning, decision-making, financial management, and reporting – including requirements to produce long-term plans, annual plans, annual reports and pre-election reports (Part 6).
  • A range of obligations, restrictions and powers, including requiring local authorities to assess their communities' needs for water, and wastewater and sanitary services, and placing an obligation on local authorities to provide water services to ensure continued public ownership of water services (Parts 7-9 & 11).
  • The powers of the Minister of Local Government in relation to local authorities (Part 10).
The purpose of this 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 meeting the current and future needs of their communities for good-quality local infrastructure, local public services, and performance of regulatory functions.
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 meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.
(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 provides a framework and powers for local authorities to decide which activities they undertake and the manner in which they will undertake them.

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.

The general powers given to local authorities 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).

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. This Part also specifies the constitution and purpose of 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. 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, decision-making, consultation and accountability

Part 6 of the Act promotes accountability between local authorities and their communities and a long-term focus for the decisions and activities of the local authority. It requires local authorities to prepare a ten-year LTP, which is to be reviewed every three years. 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 Act also requires certain decisions, such as commencing a significant activity, to be undertaken in accordance with the LTP or by way of an amendment to the LTP.

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 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 are also 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 LTP 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 LTP. 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’ intended and actual activities and performance in relation to LTP 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.

Obligations, restrictions and powers

Part 7 includes a requirement for territorial authorities to make broad assessments of the needs of their communities for water, wastewater, and other sanitary services. It 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 35 years. Further restrictions require that the local authority retain control over pricing and the development of policy relating to the delivery of water services throughout any contract involving the private sector. Part 7 also includes some restrictions on the ways in which councils can dispose of parks, reserves and endowed land.

Part 8 provides a number of coercive powers including bylaw making, enforcement and development contribution 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. Local authorities must 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 gives powers to 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.

Local Government Act 2002 Amendment Act 2010

The Local Government Act 2002 was amended in November 2010 by the Local Government Act 2002 Amendment Act 2010 to improve the transparency, accountability and financial management of local government.

The amendments included:

  • standardising non-financial performance measures for infrastructure services to enable comparisons between councils;
  • introducing pre-election reports, to stimulate debate during council elections;
  • introducing financial reporting regulations to prescribe the matters that must be disclosed in financial statements, and the manner in which they must be specified;
  • requiring councils to include a financial strategy in their long-term plan with limits on rates and debt, and targets for returns on council investments;
  • simplifying long-term planning processes and giving them a more strategic focus;
  • giving councils greater freedom to decide when and how to obtain the views of persons affected by decisions.
  • merging the community outcomes process into the long-term planning process;
  • reducing restrictions on the use of the private sector to deliver council services, improving councils’ flexibility to choose effective and efficient delivery methods for water and other services;
  • For more information on this act please go to

    More information about the amendments, including a summary paper, a copy of the Amendment Act and relevant Cabinet papers can be found here.