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New legislation passing through Parliament could make it harder for new irrigation schemes and other large projects in Otago to gain council investment.
Waitaki District Council chief executive Mike Ross said under the new statement of purpose clause included in the Bill amending the Local Government Act, investments such as the council's $10 million loan to fund a 10,000ha expansion of the North Otago Irrigation Company scheme, would have been open to legal challenge.
But Central Otago Mayor Tony Lepper has few concerns, saying the key was to consult ratepayers during the planning process.
Mr Ross said the WDC loan, which was to be repaid in 2016, would not be affected by the new Bill, because the decision had been made under the existing legislation.
However, if the loan had been granted under the new legislation, anyone "with an axe to grind" and the funds to mount a judicial review, could challenge such a democratic decision that had effectively kept "the economy of this community rolling along right through the recession", Mr Ross said.
"It won't be able to overturn any investments that have been made under the old purpose clause of local government, but it may affect the ability of councils to invest in things that any particular opposition group has a reason to oppose."
He said "disaffected parties" could in future challenge any local council decision they did not like.
The Bill will change the purpose of local councils from having to act in the economic, environmental, social and cultural "wellbeing" of constituents, to providing "good-quality local infrastructure, local public services and performance of regulatory functions."
Mr Ross anticipated legal challenges throughout the country, as councils made decisions on what to include in their annual plans next year.
Mayor Alex Familton said the introduction of the Bill had put the Government on an "incorrect course".
Mr Familton said the Bill would result in "large" litigation costs for councils, at a time when WDC was trying to reduce disputes through involvement with the Mackenzie Sustainable Futures Trust to end legal wrangles between farmers and environmentalists.
Cr Jim Hopkins said the uncertainty surrounding the definition of the new narrower statement of purpose for councils was "frightening".
Dunedin-based Labour MPs David Clark and Clare Curran yesterday lambasted the changes to the purpose clause.
Dr Clarke said there was no evidence to show that "the four wellbeings" had resulted in higher rates or any expansion of local government activities, and added the new clause did not take into account "the special needs" of small or isolated communities.
Ms Curran said the Bill could also threaten activities like the Mayors Taskforce for Jobs.
Local Government Minister David Carter said the Bill's passage completed the first phase of the Government's Better Local Government reforms, which would "focus local authorities on operating more efficiently and effectively, by doing things that only they can do".
Mr Lepper did not fear the Bill being a barrier to large projects, including irrigation, starting in his district.
"I think we have a very sensible population, and as long as we consult with them during the planning process and take them with us, they are unlikely to make legal challenges."
Central Otago District Council chief executive Phil Melhopt said time would tell if the Bill sparked any increase in litigation. The Central Otago council had "very few litigations" in its history.