Simplifying Local Government Case Not Made

Current and past NZ Governments have obsessed about reforming Local Government. I have considered the evidentiary case for such reforms and find that there isn't one.

Victor Luca, 7 July 2026

Since I first entered Local Government in 2019, both Labor- and National-led Governments have shown an obsession with reforms of Local Government (LG). Failure of LG and declining voter turnout were often cited as reasons for the need to reform. The current lot call their reform, ‘Simplifying Local Government’. It is interesting that they have used the word ‘simplifying’ as opposed to ‘amalgamation’. Politics at work I suppose.

I am neither for nor against the proposed Government reforms of LG. I could support the reforms only if definitive proof could be provided that changing the status quo and opting for the unknown, the untested, gets ‘better’ results for rate payers. But what do we mean by better and how do we measure it? Better could mean improved economic efficiency, cost savings relative to the status quo, improved service delivery and democratic outcomes.

If Government could put solid evidence on the table that bigger really is better, then I would feel compelled to yield to that view. If that proof exists, then in my six years in LG, I was never shown it.

The Mayor of Tauranga City has been right behind the amalgamation agenda, and indeed was actively advocating for it after only having been in the job for less than a year. He clearly could care less about evidence.

If the real intention is to reduce the number of LG entities (District and Regional Councils) to satiate some kind of ideological urge or dogma then that is not good governance. Decisions need to be evidence-based.

Local Government is not like building cars where scale certainly does matter. Local Government is not dealing with the manufacture of things, it is dealing with people and is responsible for delivering an extremely diverse array of services.

In 2022 the Infrastructure Commission released a report, ‘Does size matter? The impact of local government structure on cost efficiency’, Te Waihanga Research Insights series, July 2022.

In this excellent report no strong arguments were presented for reducing the number of LG entities, quite the opposite. The message of the report needs to be taken on-board not swept aside or ignored because it is inconvenient. I urge readers to peruse the report which is very readable and easily accessible on the internet.

Nick Clark, a Senior Fellow at the conservative Think Tank, The New Zealand Initiative, and with whom I have interacted on many occasions, states ‘Centralisation has been New Zealand's answer to local government's problems for decades. It has not worked’. Nick is a pretty sensible guy.

Just as there are economies of scale, so too can there be dis-economies of scale. That is, as things get bigger efficiency reduces. There seems to be no argument for amalgamations except perhaps in a very limited number of cases.

On 16 May of 2025, as the Mayor, I authored an opinion piece in the Beacon, ‘Crisis - What crisis?’. In it I included a table of the number of New Zealand LG entities over time and showed that the infrastructure deficit started blowing out just at the time that the number of local government entities was dramatically reduced from 454 to 86. That is, between 1980 and 1990, the time of the neoliberal economic reforms.

In the mid to late 1980s New Zealand embraced the neoliberal economics which has become mainstream and which we in NZ have stuck to doggedly despite the fact that it is patently obvious that this form of economic thinking has failed abysmally.

Infrastructure is a key responsibility for LG and the fact that the infrastructure deficit widened dramatically when the number of LG entities was cut doesn’t argue in favor of cutting, it argues the opposite.

One can compare the number of LG entities per million of population for developed nations that might be considered models for New Zealand which has 15.3 LG entities per million of population. For comparison Switzerland has 231, Finland has 54.5, Sweden has 29.3, Australia has 19.7 and Denmark has 16.3. NZ has the lowest number LG entities per million of population than any of the countries listed and substantially fewer than most.

In 2025 I scoured the international academic literature on the subject of whether larger LG entities are better than small ones and can’t find a single study that convincingly proves that bigger is better. My literature study has tended to point in the opposite direction. At best one study suggested a sweet spot at a population of between 20,000 and 50,000 people per LG entity.

A major danger of large government entities such as for example a BOP unitary council is the manner in which the large population areas, like Tauranga, dominate smaller less prosperous areas like Whakatāne, Ōpotiki and Kawerau. I have seen at first hand this sort of domination play out. The big guys get everything and the rest of us get screwed. Anyone wanting a local voice should not be in favor of amalgamations.

If bigger is better, then logically it might follow that a single LG entity for all of New Zealand would be the ultimate. Of course, this is a Reductio ad absurdum argument, although central government might like the idea. The reason we divide things up into smaller units is to improve manageability and give more local expression.

If Government has proof that bigger is better, then it should put that proof on the table. So far the minister of Local Government has done no such thing. What my research suggests is that government thinking is flawed. The Minister of LG should focus on finding more money to help shrink the infrastructure deficit, and force current LG entities to be less wasteful and more efficient. He is clearly not interested in evidence.

References

(Not intended to be an exhaustive list)

Amusa, H. A., & Fadiran, D. The efficiency of public expenditures on basic services: The case of South African municipalities. S. African J. Economics. 2024, 92(2), 183-213.  https://doi.org/10.1111/saje.12377

Blom‐Hansen, J., Houlberg, K., Serritzlew, S., & Treisman, D. Jurisdiction Size and Local Government Policy Expenditure: Assessing the Effect of Municipal Amalgamation. Am. Political Sci. Rev. 2016, 110(4), 812-831. https://doi.org/10.1017/s0003055416000320

Cerqua, A., Giannantoni, C., Zampollo, F. The Causal Relationship Between Jurisdiction Size and Institutional Quality. J. Regional Sci. 2026, 66(2), 685-702. https://doi.org/10.1111/jors.70057

D'Inverno, G. Moesen, W., De Witte, K. Local government size and service level provision. Evidence from conditional non-parametric analysis. Socio-Economic Planning Sciences, 2022, 81, 100917.

https://doi.org/10.1016/j.seps.2020.100917

Kortt, M.A., Dollery, B., & Drew, J. Municipal Mergers in New Zealand: An Empirical Analysis of the Proposed Amalgamation of Hawke’s Bay Councils. Local Government Studies, 2016, 42(2), 228-247. https://doi.org/10.1080/03003930.2015.1007133

McQuestin, D., Drew, J., & Dollery, B. (2017). Do Municipal Mergers Improve Technical Efficiency? An Empirical Analysis of the 2008 Queensland Municipal Merger Program. Australian Journal of Public Administration. https://doi.org/10.1111/1467-8500.12286

Tavares, A.F. Municipal amalgamations and their effects: a literature review. Miscellanea Geographica. Regional Studies on Development, 2018, 22(1), 5-15.

Zheng, T., Sun, B., De Witte, K.  Do Municipal Amalgamations Work? A Systematic Literature Review. Urban Affairs Review. 2026, 1-33. https://doi.org/10.1177/10780874251410080