The Council of Trade Unions says proposed changes to local government could drive down wages and encourage councils to contract out local services.
A select committee is hearing submissions on a bill that would control local government spending and reduce rates increases by requiring council to focus on their core business.
CTU president Helen Kelly says under the new laws, council spending and staffing levels would be capped and the union is worried that will lead to greater contracting out of core council services.
Ms Kelly told the committee on Friday it is appalling that salaries above $60,000 would have to be reported.
"We're very, very concerned that this obsession with driving wages down is implicit all the way through the industrial relations changes in this act and actually, local government wages are not out of control.
"But regardless, we want to see wages rise and we don't want to see legislation that suggests that they should go down."
However, a farmers ratepayers group in Horowhenua supports the proposed local government changes.
Spokesperson Chris Mitchell told MPs rural rates in the district had risen about 30% over the past three years to pay for items that are nice to have, but not necessary.
"However at the same time, basic infrastructure - especially potable water supply, environmentally responsible sewage treatment and disposal and stormwater - seems to be crumbling around our district.
"Therefore, our group wholeheartedly supports the bill's intention to refocus the purpose of local government."
Events and festivals 'at risk'
The Tourism Industry Association warned that events and festivals could be at risk if the proposed law changes go ahead.
Chief executive Martin Snedden told the select committee on Friday the bill restricts councils from investing in events, festivals and visitor infrastructure.
Mr Snedden says local councils have a vital role to play in regional economic development and council-backed events such as the Ellerslie International Flower Show and Warbirds over Wanaka could be at risk.
He says local government should be allowed to continue to invest in the tourism industry.
The committee is to report back to Parliament by November this year.