The Government has announced an independent inquiry into local council rates, overtaking a deal between National and the Greens to hold a select committee investigation.
Local Government Minister Mark Burton said rates funding was an important issue concerning central government, local government and ratepayers.
"The Labour-led Government believes an independent inquiry is the best way to consider these issues," he said.
"We have been working closely with New Zealand First because, like us, they are concerned to ensure that this issue is dealt with in an independent manner."
The Government's decision does not prevent the local government select committee from holding its own separate inquiry.
The Green Party's MP on the committee, Metiria Turei, said her party would wait to see the terms of reference for the Government's inquiry before making any decisions.
ACT leader Rodney Hide has a rate capping bill up for its first reading tonight. It is likely to fail as NZ First held the balance on numbers and has now got the alternative inquiry it wanted.
Mr Hide said his bill had prompted the Government to act.
"It's good that Parliament is looking into it and Parliament is taking it seriously, but we actually want to see a solution and that's a great advantage of my bill because it stops the rate increases from being outrageous."
Mr Hide said he would be disappointed if his bill failed "because it's actually a solution and that's what we should be looking at".
"New Zealanders have had enough of politicians talking and inquiring and having commissions and they actually want to see some answers."
Mr Hide said he would see what the terms of reference were before deciding whether ACT would support the inquiry announced by the Government.
Ms Turei was in the same position. She made it clear that Green support would depend on the inquiry's scope, as it could still pursue a select committee inquiry.
"We'll see what the terms of reference are, there's no point doing two inquiries, that's just silly and a waste of money, but until we've seen the terms of reference...we'll have to wait and see."
The Greens wanted local government funding of public transport, Maori rating issues and others to be addressed.
"If those issues are not included in the terms of reference or commission of inquiry we have to really think about our position."
Ms Turei said the Greens had the deciding vote on the select committee so if National still wanted to pursue a rates inquiry and the Greens agreed, then it could be pursued.