The Prime Minister is signalling potential intervention in Wellington City Council.

It comes after the council has been forced back to the drawing board on its Long Term Plan, after a $400-600 million budget shortfall from backtracking on its airport shares sale.

Mayor Tory Whanau says she hasn't heard anything from the Government about intervention.

But Luxon told Mike Hosking they're keeping an eye on the council.

He says if they need to intervene, they will.

Luxon is also standing by the decision to pour $24 million into Gumboot Friday.

Auditor-General John Ryan has found the project was funded without an open and transparent process.

Mental Health Minister Matt Doocey has pointed to the Ministry of Health as being responsible for its implementation.

Luxon told Hosking that National had campaigned on backing Gumboot Friday and agreed to the investment with New Zealand First.

He says the Auditor-General can write its report and say there are things that could be done better, but the bottom line is he's backing it.

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