The Government wants to merge New Zealand’s councils into a smaller number of big councils. A new report from The New Zealand Initiative says this is the wrong fix. 
 
In Head Start Done Right, Senior Fellow Nick Clark says the real problem is not that we have too many councils. It is that too much power has been taken away from local communities and moved to central government. 
 
“New Zealand already runs one of the most centralised systems in the developed world,” says Clark. “Fewer and bigger councils will not fix that. It will make it worse.” 
 
This matters for ordinary people and for business. Bigger councils are further away and harder to hold to account. Rates keep going up. And the basics that people rely on, like roads, water pipes and building consents, keep falling behind. 
 
The report looks at the Government’s Head Start plan, announced on 5 May 2026. Councils have until 9 August to put forward plans to merge. Those that do not, or whose plans are turned down, will have a merger arranged for them. Regional councillors will not stand again in 2028. 
 
Clark says the idea that bigger councils save money does not stack up. The Infrastructure Commission looked at this in 2022 and found no link between the size of a council and how cheaply it runs. Auckland’s big merger in 2010 was never properly checked, so the promised savings were never tested. What we can measure is not encouraging. Spending per person and household rates both rose sharply. 
 
“Auckland is the example to learn from, not to copy,” says Clark. “The savings never showed up. But Auckland is not the worst council either. Its spending and debt have grown about the same as everyone else’s, or a little slower. If bigger really meant cheaper, the country’s biggest council would be the star case for it. It is not. That tells you size is not what controls cost.” 
 
The report says the plan ignores four things: whether merging councils actually works, the value of having councils compete with their neighbours, how the new councils will be paid for, and the loss of local voice when councils get bigger. 
 
The report does not argue against change. It sets out five simple rules for doing it well. Do not merge more than you need to. Draw boundaries around real communities, not lines on a map. Give local communities a layer of government with real power. Find a proper home for region-wide jobs, like managing rivers and flood protection. And at the same time, fix how councils are run, so that elected mayors and councillors, not council staff, are the ones really in charge. It also calls for changes to the way councils are funded. 
 
“The Government has asked councils to lead their own reform, and that is the right call,” says Clark. “Councils that build their plans on sound rules will be in a much stronger position than those that just do a standard merger. The choices made in the next few weeks will shape local government for decades.”