The Local Government (System Improvements) Amendment Act 2026 becomes law
The Local Government (System Improvements) Amendment Act 2026 becomes law
Thursday 24 September, 2026
The direction of local government legislation has shifted more than once since the Local Government Act 2002 (LGA) came into force on 1 July 2003, and it is shifting again.
With the commencement of the Local Government (System Improvements) Amendment Act 2026 (the Act) on 19 September, the stated purpose of local government changes. It is no longer to promote the social, economic, environmental, and cultural well-being of communities. Instead, it is to meet the current and future needs of communities for good-quality, cost-effective and local infrastructure, public services and regulatory functions.
This is not the first time the purpose provision has been recast. In 2012, the four well-beings in the original version of the LGA were removed in favour of “good-quality local infrastructure, local public services, and performance of regulatory functions”. In 2019, they were restored. It was difficult to see what changed in terms of the actual activities of local authorities during those periods, but this time it may be different. The Act includes provision for greater regulatory controls over local government, and it comes alongside a complete revamp of the delivery of water services and of planning and environmental controls.
Add to that the Government’s Head Start for Simplifying Local Government initiative and its expressed preference for reorganisation of existing local authorities. There is also the Local Government (Rates Capping) Amendment Bill, currently before the Finance and Expenditure Committee, and the Local Government (Management of Local Authorities) Amendment Bill. Although the latter is a Member’s Bill, its sponsor is Stuart Smith, a National MP since 2014 and Government senior whip. The Bill passed its first reading and has been referred to the Governance and Administration Committee, with a report due on 5 February 2027.
It is inevitable that this time around there will be real change.
What the Act does
At a high level, the Act is designed to reduce pressure on council rates by sharpening the statutory focus of local government, improving performance reporting, strengthening governance and accountability settings, and simplifying selected regulatory requirements. In doing so, it goes well beyond the central change of refocusing local government on meeting the current and future needs of communities for good-quality, cost-effective and local infrastructure, public services and regulatory functions.
Core services
Councils must have particular regard to core services and the revised purpose of local government when making financial management decisions. The core services are:
• network infrastructure,
• public transport services,
• waste management and waste minimisation,
• emergency management, and
• libraries, museums, reserves, and other community and recreational facilities.
The Act does not remove councils’ general competence or prevent funding of other activities. However, it does change the statutory lens through which those choices are made. Activities outside the clearest core-service categories may need stronger justification, particularly where they compete for funding with infrastructure renewal, essential services, regulatory delivery or affordability objectives.
Performance reporting, transparency and governance
A second major theme is comparability and public accountability. The reforms support better measurement and publication of council performance, including through common reporting categories and non-financial performance measures. The objective is to make it easier for communities, elected members and central government to understand how councils are performing and to compare performance across authorities. For example, the Act imposes a new responsibility on chief executives to ensure that councillors have access to information held by the council that is reasonably necessary for the performance of their duties as elected members. There is a corresponding provision in Schedule 7 of the LGA supporting councillors’ rights to request information. In addition, the annual report must include all operating and capital expenditure on consultants and contractors.
The Act also supports stronger governance settings, including clearer expectations around elected-member conduct through the introduction of a standardised code of conduct and standing orders. In a significant change to committee arrangements, non-elected (appointed) members of committees and sub-committees will no longer form part of a quorum or have the right to vote. For councils, this will mean aligning internal governance documents, delegations, reporting templates and meeting procedures with the new statutory framework. More importantly, it will limit the input of external experts in areas such as risk management, where many committees currently include or are chaired by professional appointees. It is also expected to significantly limit Māori input into decision-making processes.
Development contributions for fast-track consents
One of the specific amendments introduced by the Act is to make provision for new or amended development contribution policies to be applied to developments consented under the Fast-track Approvals Act 2024. Although not applicable to projects already consented, these new provisions will allow councils to provide for development contributions to fund, or partly fund, new infrastructure to service unplanned development consented under that legislation.
Practical implications for councils
To take account of these changes, councils may wish to consider:
o Reviewing strategic documents, financial strategies and long-term planning material against the revised local government purpose.
o Assessing whether current and proposed activities can be explained by reference to cost-effectiveness, core services and community need.
o Checking performance measures, activity groupings and public reporting processes for consistency with the new requirements.
o Updating governance documents, standing orders, codes of conduct and committee arrangements where required.
o Preparing communications that explain to communities how the council is balancing affordability, infrastructure investment, service levels and regulatory responsibilities.
Comment
The Act is part of a broader programme of local government reform. It will influence how councils frame priorities, funding decisions and accountability to ratepayers. The immediate task for councils is implementing changes in the delivery of water services and planning and environmental management but giving effect to the requirements of the Act will be equally necessary over the coming months. The logistics are considerable, and beyond that there is uncertainty about the constitution of councils themselves if reorganisation proceeds.
Local government is always busy, but the pace of change over the next few years is set to be exceptional.
We can help
If you would like assistance from our experts at Tompkins Wake, let us know. We have ‘been there done this’ before.
