Local Government reforms: Shake up could prompt amalgamation, but is bigger better?

The Government has said reorganisation plans could include shared services, council-owned companies, reallocating functions, or merging territorial authorities to form new unitary councils.

These boards mean reorganisation is locally led, but the Government is pulling other levers which could influence decision-making.

Proposed rates capping, three waters reform, and changes to resource management all have the potential to steer councils towards amalgamation.

Asked whether the reforms would work best if boards ultimately decide to form larger unitary authorities, Resource Management Act (RMA) Reform Minister Chris Bishop said, “I think that is a fair summation of the situation”.

Local Government Minister Simon Watts said the plans “would assess how councils across a region can best work together to deliver efficient and effective local infrastructure, public services and regulatory functions”.

The work these boards have been tasked with is so consequential that Local Government New Zealand (LGNZ) regional sector chair Dr Deon Swiggs said it would require a significant amount of extra work for most mayors.

“Taking on the governance of regional councils would further add to this workload and could jeopardise the speed and quality of the reorganisation plans and the implementation of resource management reform.”

LGNZ has suggested retaining regional councillors until either the end of this triennium or when reorganisation plans are finalised.

“Regional councillors have important insights to contribute to the development of these plans, which would be lost if they are completely removed from the process,” Swiggs said.

“We want the right expertise in the room so that the most significant changes to local government since 1989 are successful and enduring.”

A 2022 Infrastructure Commission report investigated the impact of local government structure on cost efficiency.

It found council size has no bearing on an organisation’s cost efficiency, with larger councils no more efficient than smaller ones in delivering these services.

Using road maintenance, building consent processing, and governance overheads as examples for spending areas to compare, the commission warned against assuming structural changes would result in more efficient organisations.

“You would expect to see some cost efficiencies in areas like road maintenance or building consent processing where you should be able to do that a bit better or cheaper with more scale of an organisation - we didn’t find that in the data,” Infrastructure Commission strategy general manager Peter Nunns said.

“In at least in the areas that we looked at, the types of functions that we were looking at, larger entities don’t necessarily perform better on average.

“They don’t perform worse when it comes to the cost of providing those services, they’re about the same on average,” he said.

Given the lack of evidence larger authorities are more efficient, Nunns said leaders should be clear with the public over what benefits amalgamation would have, and what the case is for creating larger authorities.

In Southland, a merger combining Southland District Council (SDC) with Gore District Council and the regional council Environment Southland into one unitary authority has been proposed.

The authority would be “predominantly rural in flavour and outlook,” SDC said, and Invercargill City Council would take over the urban responsibilities of the city.

Those behind the proposal have said it would provide a strengthened regional voice, streamlined services, and cost savings.

The Local Government Commission is currently investigating the reorganisation.

It has also received formal notification from Hamilton City and Waikato District Councils that both councils are working on a proposed boundary reorganisation.

Outside of these formal notifications, the Commission has also received a request for information from Carterton, Masterton and South Wairarapa councils.

The most obvious example of a New Zealand amalgamation is the 2010 formation of Auckland’s super city, where eight councils combined into one unitary council.

The success of Auckland’s experience remains a matter of debate, although figures like Mayor Wayne Brown and former Prime Ministers John Key and Helen Clark agree the result has been largely positive, arguing it made sense to combine the siloed councils into one streamlined organisation.

Auckland Council itself said in 2023 it had saved $2.4 billion since amalgamating.

But local government academic Dr Andy Asquith told the Herald the success of Auckland depends on how you measure it .

In a research paper on the topic, Asquith said it was a success story on two of three measures, arguing the formation of the super city created leadership for Auckland and provided a unified strategic direction, but ultimately failed to increase democratic engagement.

In the measure of efficiency however, gains were “hard to determine”, Asquith’s research said.

Analysis by economic advisor Philip Barry showed while some cost savings were found initially by consolidating the organisation, spending ultimately increased.

The Herald reported that despite claims the amalgamated council would do more stuff with less staff, the number of staff on the payroll climbed higher than that of the eight separate councils pre-amalgamation.

Household rates bills have climbed 85% between the super city’s formation and last year - averaging 2.16% a year above inflation.

In Auckland’s case, Asquith said “few people lived, worked, and played within a single council area, so it was quite clear that Auckland needed to change”.

That is the same sentiment Wellington Mayor Andrew Little has expressed in the capital when discussing early amalgamation plans.

Little said Wellington is increasingly seen as a region, as well as touting cost efficiencies.

The capital could be the prime candidate for reform, with Wellington leaders increasingly calling amalgamation “inevitable”, growing public support, and early talks between the region’s mayors underway.

Two non-binding referendums posed as part of the recent local elections found voters in Porirua and Lower Hutt were on board with amalgamating.

The Wairarapa councils appear to be signalling their intention to go it alone, leaving Wellington City, Porirua, Hutt City, Upper Hutt, and potentially Kāpiti Coast councils to join forces into a super-city-lite.

If that future is coming, Wellington’s leaders still need to persuade the public how amalgamation will benefit them, especially if bigger does not necessarily mean more efficient.

Ethan Manera is a Wellington-based journalist covering Wellington issues, local politics and business in the capital. He can be emailed at ethan.manera@nzme.co.nz.