Councils blew the budget by 14% two years in a row

The colourful line hides a real number

Paul Henry is a broadcaster before he is a politician, so it is easy to write off his campaign lines as showmanship. When the ACT list candidate told a Newsroom audience that “if there’s any group that could teach central government how to waste money, it’s local government”, the temptation is to file it under celebrity candidate noise. That would be a mistake, because the numbers underneath the rhetoric are the sort that should worry any business owner staring down a rates bill.

Stats NZ figures for the year ended June 2025 show councils’ total operating expenditure hit $18.1 billion in 2023/24, running 14% above the budgeted $15.9 billion. Strip out Auckland and councils still spent $11.6 billion, 11% over their own plans. This is not a one-off. The Auditor-General’s 2024 report records that in 2022/23 councils spent $16.0 billion against a $14.1 billion budget, a 13% overrun. Two consecutive years of double-digit misses is a pattern, not a weather event.

Money in, not much out

Henry’s sharpest observation is not about the spending itself but the return on it. Speaking to the Southland Chamber of Commerce, he noted that New Zealand ranks in the OECD’s top 10% for infrastructure investment but the bottom 10% for value for money. That gap between input and output is precisely the business community’s complaint. Ratepayers pour money in and get potholes, boil-water notices and stalled consents back.

He is also refreshingly sceptical of the standard fix. Amalgamation is usually sold as the efficiency play, but Henry points to Auckland as the cautionary tale, telling a Blenheim crowd that “we took all of those councils and we amalgamated them, and it’s bloody worse”. His preferred method is blunter. Reform, he says, means “we need to pick that up, and we need to shake it until a lot of things fall out and die on the ground.”

Business is already on side

Henry is not out on a limb here. The Local Government Business Forum, which brings together BusinessNZ, Federated Farmers, Infrastructure NZ, the NZ Initiative and Chambers of Commerce, said in September that the country had reached a critical point. Chair Matt Cowley put the ask plainly: “Businesses do not need more process for its own sake. They need councils that can deliver infrastructure, enable growth and keep costs under control.”

For commercial ratepayers the burden is concrete. Wellington’s commercial rates differential of roughly 3.7 means businesses pay about $3.70 in general rates for every $1 a residential property of the same value pays, as Business Central has noted. For hospitality, retail and professional services operators on the main street, council efficiency is not an abstraction.

The fix that might backfire

Here is where the story gets harder than the campaign slogans allow. The Luxon government moved in August to cap not just rates but user charges too, a surprise extension that rattled councils. Local Government NZ president and Gisborne mayor Rehette Stoltz pushed back that “local government gets only 10 percent of the country’s tax take but councils are responsible for about a third of all public infrastructure investment”. Cap the revenue while the infrastructure demands from population growth and climate events keep rising, and the likely result is deferred maintenance, not efficiency.

Not every council accepts the waste framing either. Central Otago mayor Tamah Alley said she was “yet to have one of our local ministers or MPs point to any wasted spending in my district”. The Auditor-General’s report itself attributes some of the overruns to recovery from severe weather and a recessionary economy, which complicates the simple story.

The question worth asking

With ACT polling at 7.5% and Henry ranked fourth on the list, he is all but certain to enter Parliament, and David Seymour reckons he has “pierced the gloom of the election campaign.” That gives council spending discipline a genuine political champion for the first time in a while.

But spending discipline alone does not fix the structural mismatch where councils carry the cost of growth without sharing in its fiscal upside. Business readers should press candidates on the real trade-off. Do you want cheaper rates now, or functioning infrastructure in five years? On current evidence, capping revenue without reforming funding may not let you have both. Henry has found the right target. Whether the government’s chosen weapon actually hits it is another matter.

Sources

• Act’s Paul Henry eyes local govt portfolio to slash extravagance – Newsroom (2026-09-21)
• ACT candidate Paul Henry tells electorate to vote for a National MP – 1News (2026-08-05)
• ACT has billion-dollar problem fixes, and a $1 issue to fix: Henry – The Press (2026-09-09)
• Paul Henry’s high Act list ranking leaves sitting MPs at risk – Newsroom (2026-09-14)
• Local authority financial statistics: Year ended June 2025 – Stats NZ (2026-05-26)
• Insights into local government: 2024 – Office of the Auditor-General (2025-09-09)
• Local Government Reform Must Deliver Durable Change, Business Forum Says – Scoop (2026-09-03)
• Councils chilled by Luxon’s surprise u-turn to cap charges, as well as rates – Newsroom (2026-08-25)
• Simplifying Local Government – A Draft Proposal – Business Central