Until 1989, New Zealand had around 850 elected local government bodies. Councils sat alongside elected water catchment boards, pest destruction boards, harbour boards, drainage boards and electricity supply boards. The democratic granularity was sometimes confusing and occasionally inefficient. It was also the deepest civic infrastructure in the country.
That year, the fourth Labour government swept it away. Two hundred and forty-nine city, borough, district and county councils became 73 territorial authorities. Most special-purpose boards were consolidated into 13 newly established regional councils. The reform was justified solely on theoretical efficiency grounds. No serious case was made that the bodies it abolished had been doing their jobs poorly.
In 2010, John Key's National government did it again. Eight Auckland councils became one supercity governing 1.8 million people through 20 councillors and a mayor. The same efficiency case was made. A 2025 analysis by TDB Advisory found that Auckland Council's real per capita spending had risen 34 percent in the 15 years since the reform. A promised post-implementation review was never undertaken. Voter turnout in Auckland's 2025 local elections was just 29.3 percent.
Between 2017 and 2023, the Ardern-Hipkins Labour government extended the pattern across other sectors. Twenty District Health Boards, each with elected members, were rolled into Health New Zealand in 2022. Sixteen regional polytechnics were merged into Te Pūkenga in 2020.
Three Waters would have consolidated the country's drinking water, wastewater and stormwater functions into a small number of regional water services entities. More than 30 mayors organised against it, and the programme was reversed at the 2023 change of government.
The pattern crosses party lines, with both Labour and National making the same kinds of moves with the same lack of evidence.
Last month, the current government announced the next round, called ‘Head Start’. RMA Reform Minister Chris Bishop and Local Government Minister Simon Watts gave councils three months to put forward their own merger proposals or have mergers imposed on them. Again, the justification is efficiency-in-theory. And once again, hard evidence that efficiency will be achieved in practice is lacking.
Forty years of this trajectory have produced predictable results. New Zealand is one of the most centralised countries in the OECD and one of the most consolidated, with one territorial authority per 79,000 residents, against Switzerland's one per 4,000. The government's own Infrastructure Commission sought the efficiency gains consolidation was supposed to deliver and could not find them. Its 2022 report, Does Size Matter? found no clear relationship between council size and cost efficiency.
Regional councils will carry on until the 2028 local elections. After that, their functions will be taken up by unitary councils, territorial authorities which also perform regional council functions. Auckland, Gisborne, Nelson, Tasman and Marlborough are current unitaries. Under Head Start, they will become the default.
Managing water catchments, land drainage infrastructure and pest control are critical activities that require strong focus. They will be lumped in with higher profile local council activities like roading, rubbish, libraries and parks, potentially repeating the mistake with water services. These services were neglected for years in favour of more visible issues, until burst pipes and disease outbreaks made the neglect impossible to ignore.
Other countries have come at this problem from the opposite direction. The Netherlands has established waterschappen for catchment-scale water management, with their own powers and functions distinct from those of municipalities. Switzerland has regional-level structures in its 26 cantons. Other European countries use special-purpose sub-national bodies for functions that do not fit within ordinary municipal boundaries. Single-purpose elected bodies are not a relic of a dark past. They are the right architecture for functions where geography does not neatly match the territorial unit.
In 2016, the New South Wales government proposed reducing the number of councils from 152 to 112. There was substantial local opposition and court challenges. The programme ended at 128 councils after the state government had abandoned many of the mergers. The promised efficiencies did not arrive. Peer-reviewed analyses showed no reduction in council spending after forced amalgamation.
New Zealand’s forty-year retreat from local democracy has not delivered what its proponents promised, and the next round will not deliver either. The right direction is to reverse the retreat. We need more elected local bodies, not fewer. We need more local authority over decisions that affect daily community life, and stronger accountability mechanisms for how that authority is exercised.
Cabinet will decide which Head Start proposals to progress later this year. Three Waters showed that local opinion can move a government when Wellington’s logic is wrong. There are just two months left in which to act. That is not long, but it should be long enough to put forward a different proposition.
Nick is a Senior Fellow at The New Zealand Initiative, focusing on local government, resource management, and economic policy. This article was first published HERE
In 2010, John Key's National government did it again. Eight Auckland councils became one supercity governing 1.8 million people through 20 councillors and a mayor. The same efficiency case was made. A 2025 analysis by TDB Advisory found that Auckland Council's real per capita spending had risen 34 percent in the 15 years since the reform. A promised post-implementation review was never undertaken. Voter turnout in Auckland's 2025 local elections was just 29.3 percent.
Between 2017 and 2023, the Ardern-Hipkins Labour government extended the pattern across other sectors. Twenty District Health Boards, each with elected members, were rolled into Health New Zealand in 2022. Sixteen regional polytechnics were merged into Te Pūkenga in 2020.
Three Waters would have consolidated the country's drinking water, wastewater and stormwater functions into a small number of regional water services entities. More than 30 mayors organised against it, and the programme was reversed at the 2023 change of government.
The pattern crosses party lines, with both Labour and National making the same kinds of moves with the same lack of evidence.
Last month, the current government announced the next round, called ‘Head Start’. RMA Reform Minister Chris Bishop and Local Government Minister Simon Watts gave councils three months to put forward their own merger proposals or have mergers imposed on them. Again, the justification is efficiency-in-theory. And once again, hard evidence that efficiency will be achieved in practice is lacking.
Forty years of this trajectory have produced predictable results. New Zealand is one of the most centralised countries in the OECD and one of the most consolidated, with one territorial authority per 79,000 residents, against Switzerland's one per 4,000. The government's own Infrastructure Commission sought the efficiency gains consolidation was supposed to deliver and could not find them. Its 2022 report, Does Size Matter? found no clear relationship between council size and cost efficiency.
Regional councils will carry on until the 2028 local elections. After that, their functions will be taken up by unitary councils, territorial authorities which also perform regional council functions. Auckland, Gisborne, Nelson, Tasman and Marlborough are current unitaries. Under Head Start, they will become the default.
Managing water catchments, land drainage infrastructure and pest control are critical activities that require strong focus. They will be lumped in with higher profile local council activities like roading, rubbish, libraries and parks, potentially repeating the mistake with water services. These services were neglected for years in favour of more visible issues, until burst pipes and disease outbreaks made the neglect impossible to ignore.
Other countries have come at this problem from the opposite direction. The Netherlands has established waterschappen for catchment-scale water management, with their own powers and functions distinct from those of municipalities. Switzerland has regional-level structures in its 26 cantons. Other European countries use special-purpose sub-national bodies for functions that do not fit within ordinary municipal boundaries. Single-purpose elected bodies are not a relic of a dark past. They are the right architecture for functions where geography does not neatly match the territorial unit.
In 2016, the New South Wales government proposed reducing the number of councils from 152 to 112. There was substantial local opposition and court challenges. The programme ended at 128 councils after the state government had abandoned many of the mergers. The promised efficiencies did not arrive. Peer-reviewed analyses showed no reduction in council spending after forced amalgamation.
New Zealand’s forty-year retreat from local democracy has not delivered what its proponents promised, and the next round will not deliver either. The right direction is to reverse the retreat. We need more elected local bodies, not fewer. We need more local authority over decisions that affect daily community life, and stronger accountability mechanisms for how that authority is exercised.
Cabinet will decide which Head Start proposals to progress later this year. Three Waters showed that local opinion can move a government when Wellington’s logic is wrong. There are just two months left in which to act. That is not long, but it should be long enough to put forward a different proposition.
Nick is a Senior Fellow at The New Zealand Initiative, focusing on local government, resource management, and economic policy. This article was first published HERE
6 comments:
At last. Someone that understands what really happens .Every twenty five years we have another bunch of politicians that think they can reinvent Local Government. They never attempt to understand why historically things were constructed the way they were.
Thanks Nick.
So it's local accountability we want is it? Well that's worked really well so far hasn't it. You need look no further than voter turnout at local body elections to see that the vast majority of New Zealanders don't give a rat's a**se who runs their cities and towns. Every council could be replaced by an appointed Commissioner and most folk would not notice much less care. Lets admit our experiment with local democracy has failed and move on.
A good argument Nick, but the horse, again, has left the stable. Reconstituting the old Local Govt system is a Herculean task, and probably just not possible any more. The reason, of course, that central govt wants fewer, and bigger units is not for any potential benefit to local voters. It is purely naked self interest on their part. It’s much easier to control a few big organisations stacked with old cronies, than a host of smaller, independent-minded locally connected councils. Obvious, really. And both of the big parties surely think this way. So, no change there. One change that would have a huge effect: don’t pay councillors for their service. That would quickly reduce the willing contenders to those who could afford to serve, and felt a genuine desire to do so. But…ah…
I don't think decentralisation is any more efficient than centralisation, in local government. The main driver behind local body consolidation in Auckland and elsewhere was (a) too much inconsistency in approach between multiple regulators (much like local body building controls) and (b) elimination of wasteful duplication of resources. For every example of successful micro-management of local government (eg. the Swiss) I am sure you could dig out a similar number of successful macro models where efficient councils control large populations. The reasons Councils perform poorly is that they tend to be dominated by left wing Mayors and Councillors who want to redistribute wealth and have never run a successful private sector enterprise. And the fact that Councils are immune from competition, and have captive customers whom they can charge on a cost plus basis, with the power to compulsorily sell the debtor’s property if there is a default. If we could outsource local government to the private sector in a contestable market, and limit them to a narrow range of essential activities like drainage, roading, waste disposal, parks, etc. then we would really see some improvement.
I am certainly in agreement with those pointing to the steady erosion of ratepayer influence and with those too who point out the obvious fact that past amalgamations haven't brought the obvious economies of scale.
But I can't really figure out any obvious way local government can combine better accountability to ratepayers and at the same time, more cost effective governance.
But why do we, in our two remote "pimples" at the bottom of the world think that we are somehow unique or that we have to "invent" some entirely new, 'world leading' system of local government? Are there no established models we can look at? For example France has 37,000 local councils (communes) who elect their local mayor who has an executive role. 80% of these councils serve less than 1000 residents. (According to Google)
I mention this simply as an example of a system of very small units. There must be many other models.
My second point is why on earth do we have to aim at one size fits all. Why can't we trial a system in one region. (Yes we did this in Auckland although that was no 'trial', just sweeping central government edict with no, it seems, follow up assessment.)
Thirdly, why does each Council have to have it's own complete administrative system? Surely the smaller councils at least could tap into a group, say payroll system,...engineering assessment,....contracting bodies, etc.,without losing local democracy?
Finally I would be interested in the opinion of Michael Bassett who I think was the Minister in the then Labour Government that rolled up a huge number of boroughs and counties into large units. He is also an expert historian who might be able to honestly assess his own past performance!
I will put this very simply, I resent paying increasingly high rates which now take around 30% of my old age pension, with increases en route. At the same time, I read of salaries paid to our so-called public servants that are regularly in the hundreds of thousands. Problem understood, but what to do about it?
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