Local government system improvements

The local government system improvements programme (LGSI) – through the Local Government (System Improvements) Amendment Act 2026 – aims to reduce pressure on council rates by refocusing the purpose of local government, better measuring and publicising council performance, prioritising core services in council spending, strengthening council accountability and transparency, and providing regulatory relief to councils.

Overview

The Local Government (System Improvements) Amendment Act 2026 amends the Local Government Act 2002.

The Local Government Act 2002

The Act defines the powers, responsibilities, and structure of local government in New Zealand. It is a key piece of legislation that establishes the legal framework for local government operations, planning, decision-making, and accountability.

You can read about the Local Government Act 2002 on the New Zealand Legislation website.

Local Government Act 2002 - NZ Legislation website (external)

Local Government (System Improvements) Amendment Act 2026

The Local Government (System Improvements) Amendment Act 2026 is intended to give councils clearer priorities, improve public information about council performance, strengthen governance arrangements, and remove or simplify some regulatory requirements.

Most changes have taken effect already. Some changes will come into force over time.

You can read about the Local Government (System Improvements) Amendment Act 2026 on the New Zealand Legislation website.

Local Government (System improvements) Amendment Act 2026 - NZ Legislation website (external link)

What has changed

A clearer focus for local government

The purpose of local government has changed. The Local Government Act 2002 now:

focuses councils on the cost-effective provision of good-quality local infrastructure, public services, and regulatory functions, instead of social, economic, environmental, and cultural well-being
states the list of core services that councils must have particular regard to
requires councils to have particular regard to the purpose of local government and core services when determining their approach to financial management.

Core services include network infrastructure, public transport services, solid waste collection and disposal, waste minimisation, civil defence emergency management, libraries, museums, reserves, and community and recreational facilities.

The changes do not stop councils from funding other activities, including arts, cultural, tourism or economic development activities. Councils retain the power of general competence but must consider the statutory purpose and core services when setting priorities.

Elected members’ access to council information

The Local Government Act 2002 now codifies elected members’ right to access council information that is reasonably necessary for them to perform their duties.

Councils can determine their own processes for managing these requests. An elected member making a request under the new provisions must specify that the request is being made under the Local Government Act 2002, rather than the Local Government Official Information and Meetings Act 1987.

The Ministry will release guidance to councils about this change in 2027.

Development contributions

Councils can now charge development contributions to adequately recover infrastructure growth costs from out-of-phase, unplanned and cross-boundary developments approved through the Fast-track Approvals Act 2024.

Key changes to the Local Government Act 2002 provide councils with:

the ability to update its development contribution policy in response to an approved fast-track development
the ability to recover development contributions for developments that place pressure on its network capacity but are located outside its boundaries.

However, a council must meet certain requirements before it can use this new pathway to charge a development contribution. These requirements are:

the council may amend its development contributions policy no later than six months after the Fast-track approval is granted
undertake the ordinary process for amending a development contributions policy, except that it is not required to consult where the amendment relates to a Fast-track development
notify the authorised person for the Fast-track development about the development contribution
publish the amendment to the development contributions policy as soon as practicable after adopting it.

These amendments will apply to Fast-track projects at all stages unless the applicant has already received a draft decision to approve or decline the project at the time of the legislation coming into force (section 69 of the Fast-track Approvals Act 2024)

The new settings will not apply to Fast-track projects that have already been approved.

For more information, visit our Development contributions page.

Water services

A water organisation wholly owned by one or more local authorities will be treated as a local authority for relevant purposes under the Financial Markets Conduct Act 2013. This enables these organisations to be treated as wholesale investors.

You can read about the Financial Markets Conduct Act on the Ministry of Business, Innovation and Employment website:

Financial Markets Conduct Act - MBIE (external link)

Territorial authority water service providers must include water services information in their annual reports for the 2025/26 and 2026/27 financial years, unless they have already adopted a water services strategy. In that case, the information must be included in a water services annual report instead. This provides for the transition from the reporting requirements under the Local Government Act 2002 to those under the Local Government (Water Services) Act 2025.

You can read about the Local Government (Water Services) Act 2025 on the New Zealand Legislation website.

Local Government (Water Services) Act 2025 - NZ Legislation website (external link)

Other regulatory changes

The Local Government Act 2002 now:

uses modern public notice requirements under the Legislation Act 2019, such as publication on internet websites
no longer requires councils to undertake six-yearly service-delivery reviews in the prescribed form
clarifies the ability of an acting or interim chief executive, or another properly authorised person, to sign certificates of compliance for council borrowing
clarifies the treatment of third-party contributions when development contributions are calculated
requires councils to publicly advertise the chief executive position for every appointment or reappointment
removes the requirement to consider the relevance of tikanga Māori knowledge when appointing directors of council-controlled organisations
requires councils to make the final decisions on certain reserve and district planning matters themselves, instead of delegating them to a committee.

What is changing, 2026–2027

More consistent information about council performance

The Local Government Act 2002 now enables a broader and more consistent approach to measuring and publishing council performance so that people have a better sense of ‘what good looks like’. It:

enables groups of council activities to be prescribed in regulations
allows performance benchmarks to cover a wider range of council activities
makes the Secretary for Local Government’s power to set performance measures discretionary
requires councils to report expenditure on contractors and consultants.

The Government’s intention is that the new groups of activities regulations will be made shortly. Until then, the existing groups of activities continue to apply.

Councils will be required to report contractor and consultant expenditure for the financial year ending 30 June 2027, in their 2026/27 annual reports.

Non-elected committee members

The Local Government Act 2002 will reserve voting rights at council committee meetings to elected members only. Non-elected members may continue to be appointed to council committees and contribute their expertise and perspectives. However, unless an exception applies, non-elected members will no longer:

vote at committee meetings
count towards a committee’s quorum.

These changes take effect from mid-March 2027, six months after the Act’s commencement date. Councils should use the transition period to review their governance structures, committee membership, delegations, and quorum arrangements. Non-elected members can continue to participate on council committees in a non-voting capacity.

Exceptions apply to some appointments and committees established under other legislation or Treaty settlements (not including appointments of Houkura Independent Māori Statutory Board members on Auckland Council committees).

Further exceptions can be made by Order in Council, on the recommendation of the Minister of Local Government. The Minister must be satisfied that the exception is necessary or desirable. Exceptions may apply to a type of committee, a particular committee, or a type of non-elected member. More information about exceptions will be published soon.

Standard governance documents

The Local Government Act 2002 now allows the Secretary for Local Government to issue:

a standard code of conduct
standard standing orders.

The standard code of conduct will apply to elected members, local and community board members, and people appointed to council committees and subcommittees. Councils must include the standard code in briefings for newly elected members. The Government’s intention is that the new standard code of conduct will be issued shortly. Until then, councils may continue to use, amend, and replace their existing codes of conduct.

New local government standing orders have been prepared by Standards New Zealand. The Minister of Local Government has decided not to require councils to use these standing orders at this time. The standing orders (NZS 9202:2026) are available for purchase from Standards New Zealand.

NZS9202:2026 Standards New Zealand (external link)

Supporting information

The following links are to documents on the Department of Internal Affairs’ website.

On our website:

Cabinet materials related to Local Government System Improvements: Approval to release amendment paper [PDF 2.86MB]