A local government overhaul, stripping its role back to core functions, may require changes to the Land Transport Management Act which contain similar aspirations for Kiwis' social, cultural and environmental wellbeing.

The Local Government Act Amendment Bill would remove councils' requirement to consider their citizens' "social, economic, cultural and environmental well-being" in a move aimed at curbing hikes to rates and services charges.

The cabinet agreed to the new purpose in March. The bill is before select committee and faces opposition from local authorities.

"Both Acts deal with allocation of land transport funding and some degree of alignment in their purposes is desirable," Greg Mossong, principal adviser at the Ministry of Transport, says in the covering note for a regulatory impact statement (RIS) for the Land Transport Management Act (LTMA) review.

Central and local government overlap on land transport because they both contribute - about $3 billion a year from government and $1.5b from local authorities.

Transport Minister Gerry Brownlee says the Transport Management Amendment Bill is aimed at streamlining the funding processes and cutting red tape.

The LTMA's current purpose is to "contribute to the aim of achieving an affordable, integrated, safe, responsive and sustainable land transport system".

But in May last year, the cabinet agreed to change the purpose to "contribute to an effective, efficient and safe land transport system that supports New Zealand's economic, social, cultural and environmental wellbeing".

"The proposed changes to the Local Government Act purpose agreed by cabinet in March 2012 do not align well with the proposed Land Transport Management Act changes agreed in May 2011," the RIS says.

The preferred option in the RIS is to change the wording in the purpose of the LTMA amendment so that it refers to "the public interest" rather than the wider reference to "wellbeings".

"The values embedded in the term 'wellbeings' have proven controversial and the government is moving away from that term in the local government context," the RIS says.