New regs to test council performance

Local authority cost blowouts will be flagged much earlier under Government changes being introduced, says a leader in the sector.

Lawrence Yule, Local Government NZ president, said situations like Kaipara District Council's controversial Mangawhai EcoCare wastewater treatment scheme should be avoided in future because of the Local Government (Financial Reporting and Prudence) Regulations 2014.

The regulations will ensure councils measure their financial performance using seven benchmarks - rates affordability, debt affordability, balanced budget, essential services, debt servicing, debt control and operations control.

The Kaipara scheme left ratepayers there among the most indebted in the country and a judicial review, lodged by the Mangawhai Residents and Ratepayers' Association, went to the High Court at Whangarei last month.

Ratepayers were initially told the scheme would cost no more than $10.8 million in 2003, then $37 million in 2009 while at the same time the council had taken out a loan for $57.9 million for the scheme, the court heard last month.

Yule said the regulations spelt big changes because they would be freely available and ratepayers could compare one council's finances with another.

"It will show up issues like at Kaipara much earlier because it will flag some of the very extreme financial information that for whatever reason, no one seemed to pick up on there."