Chop Me In Half

Rod Oram gets it right, in part.
In a nutshell, the increase in local government debt has been driven mostly by what is politely referred to as "deferred maintenance".  What he means is that for decades local authorities let their infrastructure decay, to keep rates rises down.
This approach of undertaking minimal maintenance only works for so long.  One day your children and grandchildren actually have to pay to stop it breaking down so much.  Not maintaining systems, deferring costs into the future, is borrowing from future generations.  That "one day" has been the last decade, where we have seen a combination of rates rises, cushioned by increasing local government debt (another form of borrowing from future generations).
Ultimately the solution is in the hands of the electorate of each local government.  It would be nice to see central government keep out of local government, except perhaps to provide information.  Rather than doing the nanny-state-National thing and deciding it knows better than I do about the governance of my local area.
It would be nice to think that the mess that Kaipara District Council and Dunedin City Council find themselves in is not used as an excuse to implement National's poorly thought through agenda.
Footnote - I disagree with Mr Oram's ideas that we are over-governed, and to this end I think amalgamation is not the right solution to the problems faced by local government.  If anything we need de-amalgamation, to make local government more local.