Local councils need to impose on themselves the same kind of extreme fiscal constraints that central government has, David Carter, Minster for Local Government said today.

Mr Carter told the Federated Farmers conference in Auckland that the seven per cent average increase in rates each year over the past decade suggests there is plenty of room for constraint in local government.

Minister for Local Government David Carter says Councils need to tighten their belts.

'Over the past four years, we have seen central government impose on itself extreme fiscal constraints in our bid to rein in spending and strengthen our economy.

The logical question has then arisen – could local government undergo the same discipline? The short answer is yes.”

New Zealand's 78 local authorities are a significant component of the New Zealand economy. They make up four per cent of GDP, spend $7.5 billion per year of ratepayer money, and manage $100 billion worth of public assets. They deliver a wide range of critical regulatory functions and services that directly impact on the lives of New Zealanders every day.

The Better Local Government Reform programme will improve the operation of local government in New Zealand. It will focus local authorities on operating more efficiently and effectively by doing things that only they can do he said.

'It will deliver settings that will encourage local authorities to reduce red tape and compliance, minimise rates for households and businesses, control their debt, and provide high quality infrastructure at the least possible cost.”

Other parts of the reform will facilitate more amalgamation amongst councils.

'The current legislation makes this extremely difficult. In fact, no amalgamation has occurred under the existing rules.

Unlike the 1989 Reforms, what I'm proposing is that communities determine what will best suit their purposes – drive it from the bottom-up, make it an easier process to get proposals before the Local Government Commission, and give the Commission the power to modify proposals, and present back to the community the best possible streamlined position.

'The reforms also set out the establishment of financial prudence requirements for local authorities.

'In line with central government and every household and business in New Zealand, councils must restrain spending, keep costs down and run as efficiently and effectively as possible.

By getting local government to work in tandem with central government, we can drive a better economy for New Zealand,” he said.