After warning councils to lead their own local governing structure reform or it would be done for them by central government, RMA Reform Minister Chris Bishop and Local Government Minister Simon Watts have put the shake-up on ice until 2027.
Last year, the Government first proposed changes to local government. And in May, Watts and Bishop announced the Head Start Pathway, a fast-track for local government reform, where two or more territorial and/or unitary authorities could submit a proposal to establish a new unitary authority covering all or part of a region.
"Our message to councils is simple: lead your own reform, or we'll do it for you. Either way change is coming," Bishop said at the time.
Submissions were expected from councils in August and 18 were sent in.
But on Thursday, Watts said after considering these proposals, more work was required before Cabinet could make any final decisions on Head Start.
This announcement has left councils feeling "frustrated", with local government advocacy group Local Government New Zealand (LGNZ) saying councils had “moved heaven and earth to meet an unrealistic deadline for proposals.”
While the overall quality of proposals was high, Watts said; “none came with the unanimous view of the region, and some needed further analysis before they can progress. These are important gaps we must fill in prior to making final decisions."
He said particular areas that required further development included ensuring fair and effective representation with streamlined governance, and the transfer and delivery of regional functions.
"Rather than asking councils to commit further time and resources to finalise proposals now, the Government will now work to fill in these gaps over the next few months. Cabinet will consider these proposals in early-2027,” Watts said.
Bishop said the Government remained committed to local government reform aligned with the new planning and environmental management systems.
“Officials have been asked to provide further advice prior to taking a recommended package to Cabinet for progression into the detailed design phase of the process,” he said.
“The Government continues to expect proposals endorsed by Cabinet to be developed in detail and considered for final approval in 2027, with Head Start changes intended to be in place ahead of the 2028 local government elections," Bishop said.
“Work is also continuing on the backstop process for areas that do not progress through Head Start. Decisions on that process will be informed by lessons from the Head Start pathway, consultation feedback and further advice from officials. We continue to expect decisions on this in early 2027.”
‘Local government reform is too important to be subject to a constantly changing process’
LGNZ said councils need greater certainty about the next steps in the Head Start process than what the Government announced.
LGNZ president Rehette Stoltz said the Government’s “inability to decide which proposals will progress has left councils feeling frustrated.”
“Councils have invested significant effort in developing proposals and consulting their communities in what we’ve always said was an unrealistically tight time frame.”
“The Head Start process has really heaped pressure on councils facing once-in-a-generation resource management reform and potentially rates capping alongside delivering all the basics for their communities,” Stoltz said.
“What happens next is now very unclear.”
Stoltz said councils had been put through a “rushed process, only for the Government to now acknowledge that the work could not be completed properly in the time available”.
“Communities will not tolerate ratepayer money being spent on unclear processes that are repeatedly reshaped after the work has been done. Before councils do more work, they need certainty the goal posts won’t be moved again."
“We’ve always said reform must be locally led, not driven from the Beehive," she said.
“Local government reform is too important to be subject to a constantly changing process.”
PSA welcomes pause on 'disruptive, poorly planned and expensive' amalgamation process
The Public Service Association (PSA), the country's largest trade union, welcomed the pause on what it called "the Government's disruptive, poorly planned and expensive local government amalgamation process".
PSA assistant secretary Tom Buckley said "the risk of the Government’s mad rush was that New Zealanders would be saddled with poorly thought through amalgamations that would take decades to unpick. That’s why the PSA had advocated for pausing the process".
'Huge embarrassment'
The Labour Party has also chimed in, with its local government spokesperson Tangi Utikere saying: "Chris Bishop and Simon Watts promised a Head Start. Instead, they’ve delivered a false start."
"They gave councils three months to spend time and money planning major structural change, only to pull the plug on getting anything done before the election. That’s a huge embarrassment for a Government that has spent months telling councils this was a priority."
Labour was not opposed to local government reform but Utikere said timing mattered.
"Local economies are struggling, businesses are under pressure and construction workers and tradies are crying out for work," he said.
“This is the worst possible time to divert council staff and resources into an expensive structural reorganisation that has gone nowhere."
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