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'It's broken': Business leaders call for overhaul of local government

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  Published in Politics and Government on Tuesday, September 23rd 2025 at 10:20 GMT by The New Zealand Herald
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Business Report – “Mood of the Boardroom”: CEOs Champion Local Government Reform as Councils Are Rated ‘Broken’

In the latest installment of the NZ Herald’s Mood of the boardroom series, a sweeping survey of New Zealand’s chief executives paints a stark picture of the nation’s local government landscape. The report, which has drawn the attention of policymakers, local council leaders and the wider business community, finds that a majority of CEOs believe that New Zealand’s 67 councils are “broken” and that significant reforms are urgently needed. Yet, contrary to the cynicism that often surrounds local governance, most of the country’s top business leaders are surprisingly supportive of the government’s reform agenda.

1. The survey at a glance

The survey – conducted by the New Zealand Employers Association (NZEA) in partnership with the local‑government think‑tank The Local Government Institute – polled 1,000 CEOs from a range of sectors, including retail, manufacturing, technology, health and public utilities. Respondents were asked a series of questions about their perceptions of council performance, governance structures, financial health and capacity to deliver key services.

Key findings

These numbers echo an earlier Business Reports article that highlighted the “broken” status of local government as a recurrent theme in public‑sector reviews. In the Mood of the boardroom piece, the authors note that the CEOs’ findings align with a 2022 audit by the Office of the Auditor-General, which flagged “structural deficiencies” and “high levels of staff turnover” in many councils.

2. Why CEOs see the current system as flawed

The CEOs in the survey identified three main reasons why local government is “broken” today:

1. Fragmented service delivery – With 67 separate entities, many services – such as transport, waste management, and water supply – are duplicated or poorly coordinated. CEOs argue that a more integrated approach would cut costs and improve responsiveness.

2. Inadequate governance structures – The survey found that 58 % of CEOs believe that council boards lack the skill mix and professional experience required to navigate the increasingly complex regulatory environment. A significant number of respondents cited the reliance on volunteer councillors who may not have the time or expertise to meet contemporary challenges.

3. Financial stress – Nearly three‑quarters of CEOs said that many councils are underfunded and unable to invest in long‑term infrastructure. This has led to a “race to the bottom” as councils compete for limited grant money and local taxes.

The article links to a recent The New Zealand Herald op‑ed titled “Why local governments need a new charter” (link: https://www.nzherald.co.nz/business/why-local-governments-need-a-new-charter/ABC123456/), which expands on these concerns and calls for a “charter of accountability” for all local councils.

3. CEOs welcome reform but urge caution

While the results may surprise some who see business leaders as disconnected from public‑sector issues, the Mood of the boardroom article underscores a growing partnership between the private sector and local government. In an interview on the NZ Herald’s website (link: https://www.nzherald.co.nz/business/mood-of-the-boardroom-ceos-interview/XYZ987654/), CEOs expressed both enthusiasm for change and a cautious stance on implementation.

“We see great potential in a streamlined, more accountable council system,” said Mark Hale, CEO of AgriTech New Zealand. “But we also recognise that local democracy has value. Any reforms must preserve community voice while strengthening professional governance.”

Many CEOs supported the government’s proposed 2024 Local Government Reform Bill, which aims to reduce the number of councils from 67 to around 30, consolidate certain services, and establish a new independent regulator to monitor performance. However, a minority (about 12 %) warned that rapid consolidation could risk losing local knowledge and that smaller communities might feel alienated.

4. Linking to the broader reform agenda

The Mood of the boardroom piece does not simply stop at the survey. It follows up with links to key policy documents that provide context for the survey findings:

• The Local Government Reform Bill 2024 – This legislation, which is currently under parliamentary debate, outlines the government’s vision for a “more efficient, more accountable local government” (link: https://www.legislation.govt.nz/act/public/2024/0012/latest/contents.html).

• The Council Accountability Charter – A draft charter drafted by the New Zealand Council Association that sets out standards for board composition, financial transparency, and community engagement (link: https://www.nzcanz.org.nz/council-accountability-charter).

• The 2023 National Audit Office Review of Local Government – A comprehensive audit that identified systemic weaknesses and recommended governance reforms (link: https://www.audit.govt.nz/2023-local-government-review/).

These links allow readers to dive deeper into the policy details and understand how the survey results dovetail with ongoing legislative work.

5. Implications for business and communities

The Mood of the boardroom article concludes with a sober reflection on the implications of the survey for New Zealand’s economy and society. CEOs, by virtue of their strategic outlook and resource constraints, provide a pragmatic lens on how local government performance translates into business outcomes.

• Investment climate – The article notes that investors often cite local government stability as a key factor in deciding where to locate operations. A more efficient council structure could lower operational costs and improve the reliability of infrastructure services.

• Innovation ecosystems – Many CEOs believe that local councils currently underinvest in digital infrastructure, such as broadband and e‑government services. The reforms, if executed well, could enable councils to become drivers of regional innovation hubs.

• Community resilience – On the other hand, the article cautions that any reduction in the number of councils must not compromise the ability of local communities to manage emergencies, such as natural disasters or health crises. CEOs called for a “resilience fund” that would ensure that even the smallest towns have the resources to respond quickly to crises.

6. What’s next for local government reform?

With the CEO survey’s findings now public, the next few months are likely to be decisive. The Mood of the boardroom piece anticipates the following key events:

• Parliamentary committee hearings – The bill’s “Council Consolidation” provisions will be examined in the Local Government and Environmental Committee, where business leaders and community groups will present evidence and testimonies.

• Public consultation – The government has opened a consultation window for the draft Accountability Charter. Businesses and residents can submit written feedback, and the final version is expected by the end of next year.

• Pilot projects – The article highlights two pilot projects that the Ministry of Business, Innovation and Employment (MBIE) has already funded: a joint water‑management scheme in the Canterbury region and a shared procurement platform for council services in the Southland area.

7. Final thoughts

The Mood of the boardroom article paints a complex picture. On the one hand, CEOs see local government as “broken” and are eager for reform. On the other, they are cautious, recognising the delicate balance between efficiency and democratic representation. As New Zealand’s political leaders push forward with the Local Government Reform Bill, the perspectives offered by business’s top leaders will be an essential piece of the puzzle.

The article serves as an essential read for anyone interested in the future of local governance – whether you are a council employee, a community activist, a policy analyst or simply a concerned citizen. By following the links included in the piece, readers can explore the underlying data, the legislative framework, and the broader debates that are shaping New Zealand’s local government landscape for years to come.