A bill which gives the Local Government Commission the power to go over councils' heads and force them to integrate services has been described as anti-democratic and a threat to the future of smaller councils.

Local Government President Lawrence Yule told a select committee there was strong opposition to giving power to the Local Government Commission to establish Council Controlled Organisations (CCOs) without the agreement of the affected local councils.

Council controlled organisations are set up across groupings of councils to deliver services such as water or transport across a region.

Yule appeared to speak on the Local Government Act 2002 Amendment Bill (No 2) with several mayors from areas ranging from Tauranga to Clutha sitting behind him in support - a step he said was rare.


He said CCOs were already widely used but the suggestion they be forced on local communities without the agreement of councils by the central Local Government Commission was "anathema" to LGNZ.

"These are our assets, funded by our ratepayers. It is actually therefore for us to decide what structure they're put in, how we can best run them and how most efficiently they must be run."

Afterwards, Yule said the Government had said it would not force amalgamations on any region but the bill would have that effect if the powers for the Commission went through.

"If you take water and roading away from a lot of councils you are fundamentally taking a major part of what they do away. Particularly if you are a small council, you're left with what? No critical mass and then they say 'well should we merge somehow?'. And I think that is where you get into amalgamation by stealth."

Similar concerns were raised by Dame Margaret Bazley, a government-appointed Commissioner to Environment Canterbury (Ecan).

Submitting on behalf of the ECan and the Mayoral Forum of Canterbury, Bazley said leaving control of CCOs in the hands of local councils meant they could guard against small councils being stripped of their powers.

"The survival of small councils is absolutely imperative to support the social infrastructure across Canterbury."

She said giving the Local Government Commission power to establish a CCO without consultation or the agreement of councils would "remove the right to a democratic process".

Bazley also objected to a provision allowing the Local Government Minister to set performance measures for councils, something she said was part of the contract between councils and their communities.

"For these to be imposed by central Government would undermine that relationship, interfere with the councils' long term planning and erode the distinction between local and central government."

The bill was intended as offering a governance model similar to the Auckland Council for regions which had rejected the option of full amalgamation, such as Wellington and Northland.

It was to encourage councils to integrate core services and infrastructure such as water or transport across council boundaries. CCOs were a mechanism to do that.

Yule said LGNZ did support the intent of the bill which allowed for greater cooperation between councils over core services as well as the making local government more effective.

However, that should be driven by the local councils not central government.