Local Government Minister Rodney Hide says he will not intervene to try to resolve the Dunedin City Council's $8 million annual shortfall.
Mr Hide told the Otago Daily Times in a statement he was responsible for the legal framework within which councils operated, but "not for the actions of particular councils".
"This means local authorities are accountable to their ratepayers and citizens rather than to me, as minister, for their specific actions and decisions.
"It would be inappropriate for me to intervene in a local council matter," he said.
His comments came after an expected $8 million annual shortfall in council budgets was revealed last Friday, caused by Dunedin City Holdings Ltd's inability to provide expected dividend payments to the council.
A Department of Internal Affairs spokeswoman said, when contacted, Mr Hide had the power under the Local Government Act 2002 to appoint a statutory manager, but the criteria was "very tough".
A council had to be "wilfully or substantially refusing" to perform its duties and impairing local government or endangering public health or safety, she said.
Asked if financial problems like those in Dunedin would qualify, she said: "No, it wouldn't."
Mr Hide believed councils' activities and decisions should match the priorities of their ratepayers, but it was important decisions continued to be made at a local level.
How councils managed their costs, debt and budgets was "a matter for councils and their ratepayers".
Accountability ultimately came through the ballot box, Mr Hide said.
"I do have an expectation that councils will act prudently ... It is important that councils carefully consider their priorities and ensure that they are spending ratepayers' money wisely."
