Councils must make changes in order manage growing financial pressures, the Productivity Commission says.
Productivity Commission chair Murray Sherwin Photo: RNZ / Alexander Robertson
The government requested the commission look at local council funding and financing to find improvements.
Productivity Commission chair Murray Sherwin said the report outlines 44 recommendations to help councils that are struggling with rapid population growth, more environmental responsibilities and increasing tourism.
Mr Sherwin said the rising pressures were not evenly distributed around the country, and small rural councils were under the strain of high rates.
He said co-funding between central and local government was needed, and the report sets out guidelines about when these costs shoud be shared.