Pipes or paperwork? Mayor says councils burdened by rising audit fees

Councils are facing growing audit bills which takes ratepayer funds away from fixing the basics like "pipes under the ground", says Waimakariri Mayor Dan Gordon.

The Waimakariri District Council budgeted $496,370 in this year's annual plan to cover the costs of auditing its 2026 annual report and next year's Long Term Plan.

"It's incredibly frustrating that our audit costs are now heading towards $500,000, which is around 0.39% of our total rates take in a Long Term Plan year," said Mr Gordon, who is also Local Government New Zealand (LGNZ) vice-president.

"Every dollar we're required to spend on audit compliance is a dollar we can't spend doing good in our community."

The Audit Office says the cost rises are due to inflation and audits are part of the legislative requirements of councils.

Waimakariri District Council's 2027/37 Long Term Plan will include the council's in-house water services business unit, but the council will also need to prepare a water services audit for the Commerce Commission and a separate water services annual report.

Mr Gordon said councils have little choice when it comes to these costs.

"Local government continues to be handed new requirements and costs by central government. At the same time, we're told to prepare for rates capping."

The Government plans to cap rates to 2-4% to help ease the pressure on households.

Mr Gordon said the burden of "unfunded mandates" hit smaller councils harder, with the extra costs churning through council budgets before roads are fixed or pipes are upgraded.

"We accept the need for strong financial oversight. We take our responsibilities seriously, highly value our credit rating and are accountable to our ratepayers every day."

Mr Gordon said he will be writing to the Local Government Minister after the election to raise concerns about the impact of "unfunded mandates" and will raise the issue with Local Government New Zealand and other mayors.

He suggested the Audit Office could adopt a stepped approach for councils which had a consistent record of good audits, meaning they were not required to produce an audit every year, "rather than imposing the same level of scrutiny and cost each year".

"If central government is serious about keeping rates affordable, it also needs to look at the costs it places on to councils."

The cost of auditing the council's 2027-37 Long Term Plan has been set at $117,480, while the 2026 annual report audit cost $314,858.

Speaking at a council meeting on Tuesday, October 20, Audit Office audit director Dereck Ollsson said the new audit fee was a 10 percent increase on the fee charged for the 2024/34 Long Term Plan audit.

The increase was due to inflation, he said.

"We are always looking at how we can use technology and AI to simplify the audit process.

"But from a legislative point of view, there are still requirements we are required to measure."

Mr Ollsson said he was aware councils were under pressure from reform, "but it seems that in every cycle there's something which keeps councils up at night".

Local Government Minister Simon Watts said ratepayers deserved confidence that councils' long-term plans were "robust and spending is properly scrutinised".
"I also recognise concerns that multiple audits may add unnecessary costs, ultimately borne by ratepayers.

"I would encourage LGNZ to develop options for the next Government to consider, ensuring audit requirements and compliance costs are proportionate to risk while maintaining strong accountability."