William Foster: “Ripples never come back”: Why Political Motivations for Centralisation and Amalgamation ignore the subsequent economic and social costs.

Abstract: Centralisation/amalgamation can look administratively tidy while creating delayed democratic, fiscal and institutional costs. Yet centralisation repeatedly survives mixed empirical evidence because it aligns with the operating logic of hierarchical political systems themselves.

Introduction

America’s 250th anniversary, gave the Economist magazine an opportunity to remind people of Tocqueville’s “Democracy in America”. In Chapter 6 of Book 4 he thinks about the way future democratic societies degrade gracefully and benevolently into a form that “having thus successively taken each member of the community in its powerful grasp, and fashioned them at will, the supreme power then extends its arm over the whole community.” Government is a “tutelary power, which takes upon itself alone to secure their gratifications, and to watch over their fate.”

In that context, it’s pretty obvious from the recent statements of Ministers (https://www.beehive.govt.nz/release/councils-invited-fast-track-local-reform) that their Local Government amalgamation agenda is ignoring the differences between “collaboration to get the benefits of scale where opportunities exist” in favour of a central “control of everything” approach.

Councils and local politicians are rushing to respond, some to comply with and some to rebut or reject the “simplify and strengthen Local Government” mantra.

But having a sustainable and support democracy is not achieved just by implementing the “majority rules” simplification that subjugates minorities.

International experience shows that more complex representation and governance arrangements can produce better results - from the point of view of those being governed.

So why do politicians insist on framing local government reform to strengthen centralisation and control and weaken individual and community local power and social and economic influence - when the evidence overwhelmingly shows that amalgamations don’t provide promised savings, there are no “economies of size” and they reinforce citizens’ feelings of remoteness and disconnection? (Auckland and NSW and the Infrastructure Commission are cited as examples by Morrison Lowe in their June 2026 Report “Comparison of Head Start options” for Northland Councils)

Why do politicians talk about supporting localism while acting to do the opposite?

Several motivations operate simultaneously. The explanation is not simply “politicians are power-hungry” or “don’t understand.” The stronger explanation is that majoritarian hierarchical governance is the institutional model they live inside every day, so amalgamation feels normal, legible, and controllable to them.

A few mechanisms stand out.

Hierarchical systems train people to think hierarchically

Most politicians, senior officials, and even many governance professionals spend their careers inside organisations where authority flows downward; decisions are aggregated upward; coordination problems are solved by consolidation; and dissent is resolved by voting or executive direction (majority rules, minority is coerced).

So when they see fragmentation, their instinctive response is “Put it under one structure.”

Collaborative systems require a different approach - negotiated coordination; reversible participation (opt-in, opt-out); distributed authority; and legitimacy through continued consent.

Many decision-makers genuinely find that model unfamiliar and administratively untidy.

Amalgamation simplifies political accountability at the top

Central government prefers dealing with one mayor instead of several; one infrastructure plan (rather than different plans for different assets or different areas). They prefer dealing with one funding negotiation rather than several, and like one media narrative to get their message across.

All this reduces transaction costs for the centre, even if it increases them locally.

And running large organisations from a central control reduces visibility of the detail (less transparency) and reduces accountability by placing decision-makers at arms-length from the implementation. That is politically attractive.

So politicians are strongly incentivised to reduce visible complexity, because fragmented systems make failures and blame easier to find and harder to control.

Scale economies are easier to measure than legitimacy losses

When it comes to justification for action, Business cases for amalgamation can estimate reduced overheads like duplicated management or procurement savings, and savings from shared IT systems.

But the actual costs of transition to central systems (e.g. combining different IT, Payroll, accounting and personnel systems) are harder to quantify and easier to dismiss.

Also more diffuse and social costs, like weakened community engagement; information loss (less transparency); reduced local trust; frustrated minorities; and slow adaptation are hard to quantify and generally underestimated.

So the measurable efficiencies dominate formal decision-making even when the unmeasured losses are politically and socially larger.

Majoritarian systems undervalue minority autonomy by design

Representative democracy tends to treat “the majority has decided” as sufficient legitimacy.

But that works poorly where communities have distinct preferences and could cooperate voluntarily without surrendering self-determination.

Collaborative systems preserve minority choice; amalgamations often extinguish it.

Many politicians do not see this as a defect because they regard majority aggregation as the essence of democracy itself.

Institutional inertia and professional incentives matter

Large integrated organisations create larger managerial domains. This increases bureaucratic influence, centralises expertise and strengthens the importance of national political actors.

Even without malign intent, people working inside those systems tend to perceive consolidation as “serious governance” and localism as parochial or inefficient.

Collaboration is cognitively and politically harder

The alternative of having separate, more localised and collaborative systems and decision-making authorities requires patience. Diverse separate local systems tolerate unevenness. Governors and managers (and stakeholders) accept and generally prefer partial and beneficial participation over coercion, and depend on ongoing relationship management. That is not always easy or comfortable.

Amalgamation produces a clean diagram and a formal authority structure. It creates the appearance of resolution, even if underlying conflicts remain.

So the attraction is partly psychological: centralisation feels decisive.

Many problems attributed to “fragmentation” are actually failures of coordination, incentives, and information-sharing—not failures requiring unified control.

But unified control is the default tool of hierarchical political systems, so it keeps being applied even where collaboration would preserve more autonomy and produce better long-term legitimacy.

The costs are visible, but delayed, diffuse, and politically survivable

Politicians generally do see the unintended consequences: bureaucratic overreach, mission creep, regulatory accumulation, productivity loss, blurred accountability, self-referential reporting, and defensive governance structures. These are common features of large consolidated systems.

But those higher costs have characteristics that make them politically tolerable. They emerge gradually rather than immediately; they are spread across many people and institutions; responsibility becomes difficult to isolate (in some cases from the design), and they often create constituencies that benefit from the expanded system.

By contrast, the arguable benefits of amalgamation are immediate and visible. Politicians get to make a decisive announcement. They can speak with less information about a simplified governance map. They can make promises of efficiency, stronger “strategic leadership,” and give the appearance of taking action to solve a problem (perceived or created doesn’t matter) and promoting the change as “reform”.

The long-term costs then become absorbed into normal administration. As systems grow, complexity itself starts protecting the system from criticism because poor outcomes can be attributed to process, inherited constraints, insufficient funding, or the behaviour of other parts of the organisation.

Large centralised structures also become increasingly self-protective. They monitor themselves; report against internally designed measures (or “targets”); diffuse accountability across committees and departments; and accumulate procedural layers intended to reduce political risk.

This is one reason the “ripples never come back” idea matters. Amalgamations change not only structures, but the political economy surrounding them. Over time, more people become professionally, financially, or politically invested in maintaining the enlarged system, even when many participants privately recognise declining responsiveness or productivity.

So politicians are not necessarily ignoring these effects. More often, the short-term political incentives favour centralisation, while the long-term institutional costs are delayed, distributed, and difficult to reverse once the ripples have spread.

Cultural preferences for uniformity and fairness also support amalgamation

Institutional incentives are not the only driver of amalgamation. Political decision-makers are also influenced by underlying cultural values and assumptions about fairness, equality and social cohesion.

New Zealand political culture has long shown a preference for uniformity, equal treatment and suspicion of arrangements perceived to advantage particular communities over others. Amalgamated systems naturally reinforce these preferences through standardised policies, pooled assets and liabilities, uniform rating structures, and redistribution across wards or districts.

Centre-left politicians support this because it facilitates redistribution and reduces geographic inequality.

Centre-right politicians support it because standardisation sidelines conflict, simplifies administration, and presents itself as stable (though underlying conflicts don't disappear).

Although their motivations differ, both tendencies favour consolidation over differentiated local autonomy.

One consequence is reduced scope for policy diversity, local experimentation and competitive adaptation between communities. Allowing communities to pursue different priorities, funding and activities, express themselves differently and learn from each other through comparison and experience encourages innovation and productivity. Large amalgamated systems tend instead toward procedural consistency, risk minimisation and lowest-common-denominator policy.

This does not mean New Zealanders oppose success or innovation. But there is a strong cultural preference that success should not come at the visible expense of creating relative disadvantage or unfairness to others. Amalgamated governance structures align naturally with that instinct, by pursuing uniformity, even where they reduce responsiveness, experimentation and long-term productivity.

These tendencies are not unique to New Zealand, but they are reinforced here by a strong egalitarian tradition, a unitary-state political structure, and relatively weak constitutional protection for local autonomy.

Is there an alternative?

Central Government needs to step back. It can still set national policies, laws and regulations and enforce those, and have penalties for Local Government non-compliance. (ie It can set what they must do but not tell them how to do it.)

Central Government needs to take care of the things that must be done at national scale and that Local Governments and their stakeholders want them to do (for everyone’s benefit) – e.g. defence, law and order, justice and foreign policy - and define and fund achievement of national public standards (health, education and welfare). Otherwise its role should shift to helping and supporting local governments and the communities they represent to do the things citizens and their communities want to do.

William Foster is the Chair of the Northern Action Group – pushing for a better and fairer governance and representation deal for Rodney, and fighting to put the “local" back in Local Government.