The Government has announced a major shake-up of New Zealand’s local government system, which has left some councils scrambling and others excited.
For the property sector, the announcement signals a significant shift in how local government could operate in the future, with wide-reaching implications for planning, consenting, infrastructure delivery, and investment certainty.
What has the Government announced?
The Government has introduced two new pathways for local government reform:
- A voluntary “Head Start” pathway, where groups of councils can work together to submit proposals to reorganise into larger unitary authorities; and
- A mandatory “backstop” process, where the Government will step in and restructure councils that do not progress reform themselves.
Councils have until 9 August 2026 to submit outline proposals under the Head Start pathway, with final decisions expected in 2027 and implementation targeted ahead of the 2028 local elections.
The reforms follow consultation undertaken in late 2025 and early 2026 on the Government’s earlier proposal to replace regional councils with Combined Territories Boards (CTBs). The Government’s latest announcement changes tack by giving councils more flexibility to shape their own regional arrangements.
What is the ‘Head Start’ pathway?
Under the Head Start pathway, groups of territorial authorities can submit proposals to create larger unitary authorities that combine regional and local council functions into a single organisation — think Auckland Council’s “super city” model replicated across the country. Proposals can cover all or part of a region and, in some cases, include neighbouring councils from different regions.
If councils do not participate in the Head Start pathway, the Government has signalled it will implement a standardised restructuring approach through a backstop process after the 2028 local elections. As Local Government Minister Simon Watts put it: “Lead your own reform, or we will do it for you.”
Why does this matter for the property sector?
The current local government landscape can be highly fragmented, with different planning systems, infrastructure funding approaches, consenting processes, and governance structures operating across the country. For developers, investors, and businesses operating in multiple regions, navigating 78 different local government systems can create unnecessary complexity, delays, and costs.
It’s also important to consider the scope of this reform within the Government’s wider reform agenda. Alongside broader resource management reform, these newly formed unitary authorities will be tasked with creating spatial plans and operating a new consenting system. Development levy reform will also fundamentally change how councils fund and finance local infrastructure, while a potential rates cap puts pressure on affordability.
Property Council New Zealand supports local government reform where it results in genuine efficiencies, reduced duplication, and better outcomes for communities and the economy. For businesses and investors operating nationally, the current system can be difficult to navigate, with different rules, processes, and approaches applied across dozens of councils.
Importantly, any reform must still maintain strong local representation and ensure communities retain an effective voice in decision-making.
Challenges ahead
While the direction of reform is significant, there are still important unanswered questions.
One of the biggest challenges will be timing. Councils have only three months to develop and agree on reorganisation proposals — an ambitious timeframe given the scale and complexity of potential reforms.
Questions also remain around:
- How restructuring proposals will be legislated;
- Whether all councils included in a proposal will need to support it;
- How local representation will be maintained in larger unitary structures; and
- How existing water organisations and shared services will be integrated.
Property Council will continue engaging with Government and councils throughout the reform process to advocate for a simpler, more efficient local government system that supports housing delivery, infrastructure investment, and economic growth.
If you have any concerns or questions at this stage, please contact Bella.
Author | Bella Leddy
As an Advocacy Advisor, Bella supports the development of policy and advocacy initiatives that reflect the real-world experience of our members.
With a Bachelor of Laws and Politics from Otago University and previous experience as a policy intern at the Department of Internal Affairs, Bella brings both a sharp analytical mind and a genuine passion for public policy. She’s particularly energised by engaging with members to ensure our advocacy is grounded in industry insight and practical solutions.
Extroverted, thoughtful and service-focused, Bella thrives in roles that connect people and ideas. Outside the office, she channels her energy into teaching group fitness classes – including yoga, pilates and spin – and is always up for a good political yarn.
