The Government has warned that criminal charges could still be coming for officials who illegally increased rates and outraged ratepayers, despite a law change which legalised the rate hikes.
The Kaipara District Council collected around $17 million of rates unlawfully after secretly doubling the cost of a sewage system in 2006.
Parliament yesterday approved a bill at the second reading to legalise these rates, which were incorrectly set between 2006 and 2012.
National MP Mike Sabin, the bill's sponsor, said the retrospective legislation was a last resort and reflected significant failures by the council.
"Ratepayers should be able to have confidence in their elected councillors to carry out their core functions but in this case ... they have been woefully let down and rightly they are upset, angry and frustrated and have been for some time."
He said that the law change was "repugnant" but was needed to give the region certainty and also financial stability so that it could fund infrastructure and hold elections. The council was disbanded and taken over by commissioners last year after the rate hike debacle.
The Auditor-General was investigating the council's financial failures, and would reveal whether any officials would face criminal charges.
Mr Sabin said that "justice runs through [his] veins" and he had sought a clause in the bill that made it clear that no one was absolved of responsibility or accountablity as a result of the law change.
"In layman's terms, this is not a get out of jail free card for those who have stuffed up and got it wrong."
Labour MP Phil Twyford said he sympathised with ratepayers who had refused to pay rates as a protest against the former council's actions.
He said that ratepayers' ability to take legal action against the council would be affected by the legislation.
"Once the unlawful actions have been validated, and the rates legalised, and the rates strike brought to an end, their leverage to try to achieve a broad, legitimate and fair solution will be greatly reduced."
Mr Twyford said the Mangawhai Ratepayers and Residents Association should not be punished for "blowing the whistle" on the council. He was pleased that they had been granted an amnesty on rates penalties.
Those who had withheld their rates in protest about the cost of the wastewater scheme would have until January 2014 to pay them before incurring penalties. Nearly $4 million in rates had not been paid.
Kaipara councillors were replaced by a board of commissioners in August 2012 after the council had racked up debts of $80 million, of which $60 million was related to the Mangawhai Community Wastewater Scheme. This led to a proposed rates increase of 31 per cent, which outraged residents.
The wastewater scheme was originally projected to cost $11 million in 1999.