Federated Farmers says a return to a looser legislative mandate for local government activities presents a "depressing scenario" for those who will foot the bill — ratepayers.

Federation president Katie Milne told Parliament's Administration Select Committee last week that farmers were deeply concerned that proposed changes would give impetus to higher local government spending and rates.

The Local Government (Community Well-being Amendment) Bill also put the cart before the horse, given that the Productivity Commission had not yet begun its local government inquiry.

"Park this bill at least until the commission has done the grunt work and sorted out the drivers of council spending, and recommended how councils should be funded in future," Ms Milne said.

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The federation believed the vast majority of ratepayers favoured the current purpose statement for local government, to provide good-quality local infrastructure, local public services and legislative functions " ... in a way that is most cost-effective for households and businesses ... ," whereas the bill proposed a return to their promoting of the social, economic, environmental and cultural wellbeing of communities, with no mention of cost-effectiveness.

The last time the 'four wellbeings' were in the act (2002-2012), local government rates revenue had rocketed by 94 per cent, when inflation was 28 per cent.

"Since the removal of the four wellbeings, growth in spending and rates has moderated significantly, despite stronger population growth," Ms Milne said.

"Despite some crazy ideas, like Rotorua's infamous Mudtopia debacle, the signal from the act's current purpose statement has generally helped to focus council behaviour.

However, in this year's round of long-term plans we are starting to see some creep back; perhaps councils have been encouraged by the signals they are getting from government and this bill."

The original 'four wellbeings' legislation had also included a robust consultative regime, which was missing from the current bill.

"With weak community engagement provisions, and no relationship with funding, the re-insertion of the four well-beings is flawed and risky," she added.

"Ratepayers cannot afford for us to go back to the out of control spending and rates increases of the 2002 to 2012 decade."

She also referred to the Local Government Business Forum's report on council funding, noting the growth in non-core vs core spending over recent years, and concern that the bill would exacerbate that trend.