Local Government Minister Rodney Hide has Cabinet approval to look into law changes that will strip local council spending back to core services rather than cultural, environmental and social spending.

The Cabinet has signed off on Mr Hide's request for the Department of Internal Affairs to review local government law, including the removal of the requirement for councils to deliver on "community outcomes" such as social, environmental and cultural "wellbeing" which Mr Hide said pushed councils into providing services well beyond their core roles.

In the Cabinet paper Mr Hide said there was a need for a clearer delineation of central and local government roles. He proposed making councils more financially transparent to force them to focus on core activities.

He listed these as transport and water services and public health and safety, such as rubbish collection.

Green Party local government spokeswoman Sue Kedgley said the proposals amounted to an attempt to "castrate local democracy".

"[Mr Hide] is trying to reduce local government's powers to the point where they are unable to deliver social and environmental services."

Although the Cabinet signed off on the review, yesterday Prime Minister John Key said he did not agree with Mr Hide's definition of "core services".

He said social policies were an important role for councils.

Mr Key said the review was "an engagement in debate" and Act's policies did not necessarily reflect Government's view.

Despite Mr Key's comments, yesterday Mr Hide said some "hard thinking" was needed about the costs imposed on ratepayers in hard economic times. "There will have to be tradeoffs between the services wanted by communities and the services councils can afford to provide."

Mr Hide's paper also suggests more use of polls and referenda as a way of getting "ratepayer authorisation" for major projects, such as building stadiums or high rates increases.

Other proposals would allow a greater private-sector role in delivering council services and a wider use of user pays in the near future so some groups were not getting a "free ride" from other ratepayers for services that were not core council services.

Labour's Phil Twyford said the suggestion of public referenda was "ironic" given the Government's refusal to hold a referendum on the proposed Super City changes.

Mr Hide said draft community plans showed councils planned "significant" rates rises in the next decade to fund a 41 per cent increase in extra operating spending and $31 billion in capital spending.

Mr Hide's paper rules out public consultation on the issue until any legislation reaches a select committee.

The review would instead include "targeted consultation" of other Government agencies, Local Government New Zealand and the Society of Local Government Managers because of their "technical expertise".

Green Party co-leader Russel Norman said Mr Key needed to "rein in" Mr Hide. He described Mr Hide's intentions as a "radical right agenda" and criticised his intention not to consult publicly.

Mr Hide said financial disclosure rules for councils should also be more transparent and statements written in "plain English".

He will report back on proposed changes by the end of August and hopes for any law changes to be made in time for next year's local elections.