"Simplifying Local Government" Proposed Reforms Explained

by Simon Peirce
Associate

Introduction

New Zealand’s local government landscape is facing its most significant structural shift in over thirty years. The Government has released a new legislative proposal titled "Simplifying Local Government," aimed at fundamentally reshaping how our regions are governed.

For ratepayers, businesses, and community groups in Otago and across the country, this is not merely an administrative shuffle. It represents a pivot in how decisions about water, transport, and the environment are made.

Below, we unpack the proposed changes, the government’s rationale, and the practical implications for our clients and community.

From Elected Councillors to Mayoral Boards

At the heart of this reform is a move to abolish the current layer of elected regional councillors.

Currently, New Zealand operates a "two-tier" system. You elect local district or city councillors to handle community services (like libraries and local roads), and separate regional councillors to manage broader environmental issues (like water quality, pest control, and regional transport).

Under the new proposal, the elected members of Regional Councils would be disestablished. Their governance roles would be transferred to new bodies called Combined Territories Boards (CTBs).

Who sits on the CTBs?

These new CTBs would not be directly elected by the public. Instead, they would be comprised entirely of the Mayors from the city and district councils within that region.

For example, a future CTB for the Otago region would likely consist of the Mayors from Dunedin, Queenstown-Lakes, Central Otago, Waitaki, and Clutha. The government argues that this "Council of Councils" model will bridge the gap between local and regional priorities, reducing the friction and duplication often seen between the two tiers.

The "Double Lock": Protecting Rural Voices

A major concern with merging governance is the fear that large urban centres will dominate decision-making. In a standard vote, a city with a massive population could theoretically dictate terms to the surrounding rural districts that manage the vast majority of the land.

To address this, the legislation proposes a "Dual Threshold" voting system for sensitive decisions involving resource management (such as water allocation or land use rules).

For a motion to pass, it must achieve two majorities:

Population Majority: Support from members representing a majority of the region’s population.

Member Majority: Support from a majority of the Mayors around the table.

This creates a safeguard for smaller communities. A large city Mayor cannot push through a policy without the support of at least some rural colleagues. Conversely, a bloc of rural Mayors cannot ignore the needs of the region's population centre. It forces negotiation and compromise.

Phase Two: Regional Reorganisation

Establishing the CTBs is only the first step. The proposal acts as a catalyst for a second, mandatory phase: Locally-Led Regional Reorganisation.

Once established, the new CTBs will have two years to draft a "Regional Reorganisation Plan." The proposal encourages regions to look at options such as:

Shared Services: merging "back-office" functions like IT or procurement to save money.

Council-Controlled Organisations (CCOs): Moving operational arms (i.e. water services or economic development) into professional corporate entities owned by the councils.

Unitary Authorities: A full merger of all councils in a region into a single "Super Council," similar to the Auckland model.

Crucially, the requirement for public referenda (polls) to approve these mergers is being removed. Final approval will rest with the Minister of Local Government, based on whether the plan delivers financial efficiency and aligns with national priorities like housing growth.

The "Bang for Buck" Test: Criteria for Approval

Crucially, the development of these Reorganisation Plans is not an exercise in local autonomy. The proposal sets out rigorous criteria that must be met for a plan to be approved by the Minister of Local Government.

This approval process signals a shift towards central oversight. The criteria serve as "guardrails" to ensure local proposals align with national objectives.

The Approval Criteria Include:

Financial Responsibility ("Bang for Buck"): Proposals must demonstrate they deliver better value for money. The Government has explicitly framed this as a "bang for buck" test, requiring evidence that the new arrangements will keep rates manageable and support efficient asset management.

Efficiency: There must be clear evidence that the reorganisation will reduce costs and improve service delivery, eliminating the duplication currently seen between district and regional tiers.

National Priorities: Plans must actively support central government strategies, particularly regarding housing growth, infrastructure development, and competitive business settings.

Clear Leadership: The governance structure must be transparent, with clear lines of accountability.

Alignment with Water Services Reform

This approach of requiring local plans that must be signed off by central government is not an isolated mechanism and mirrors the framework proposed for Water Services Delivery Plans under the "Local Water Done Well" policy.

Just as councils must submit water plans that demonstrate financial sustainability to the government, these Regional Reorganisation Plans must prove they are structurally and financially viable to the Minister. In both cases, the central government retains the final veto to ensure that the "local solution" is consistent with national standards for efficiency and cost-effectiveness.

Practical Implications for Stakeholders

For Business and Property Developers: the reform promises to streamline a regulatory environment that is currently complex and costly. With the new CTBs responsible for creating region-wide spatial plans, the integration of land use and environmental decision-making could lead to faster consenting for major infrastructure and housing developments. However, this opportunity comes with transitional risk. The transition period will continue a long period regulatory uncertainty alongside significant reforms to the RMA.

For the Rural and Agribusiness Sector: farmers and rural landowners, who have frequently expressed frustration with Regional Councils as distant regulators, may see a significant shift. Placing rural Mayors who are often more directly accountable to their local communities at the regional governance table could lead to a more pragmatic approach to environmental enforcement. Crucially, the “double lock” voting system acts as a safeguard for small rural communities, ensuring that urban-centric environmental standards cannot be unilaterally imposed on those communities.

Next Steps and Timeline

The Government has outlined an aggressive timeline for these reforms:

  • Now – 20 February 2026: Public Consultation is open. This is the primary window for submissions.
  • Mid-2026: Legislation drafting commences.
  • 2027: The Bill is enacted, and the transition to CTBs begins.

Key Takeaways

The "Simplifying Local Government" proposal outlines a legislative framework for the most significant structural change to the sector in decades. The core components of the reform involve:

  • Governance Transfer: The disestablishment of elected regional councillors, with governance responsibilities transferring to CTBs comprised of local Mayors.
  • Approval Criteria: A mandatory requirement for CTBs to develop "Regional Reorganisation Plans" that must meet strict Ministerial criteria for financial efficiency ("bang for buck") and alignment with national priorities.
  • Timeline: A structured implementation path, with public consultation closing in February 2026 and legislation targeted for enactment in 2027.

Whether you are a business owner, community organisation or ratepayer, we encourage you to consider how these changes might impact your interests. Head to the Department of Internal Affairs to learn more about these changes and to make a submission. If you want to know how these changes might affect you, then please contact our specialist local government and resource management experts.

Disclaimer: This article is general in nature and is not to be used as a substitute for legal advice. No liability is assumed by Gallaway Cook Allan or individual solicitors at Gallaway Cook Allan regarding any person or organisation relying directly or indirectly on information published on this website. If you need help in relation to any legal matter, we recommend you see a qualified legal professional.