Workforce savings are more concentrated, slower and less permanent than a merger business case implies, and the transition succeeds or fails on people rather than structure, writes David Hammond, Head of Consulting and Public Sectors at Tribe Executive.
Cabinet will consider 18 Head Start proposals in early 2027, with final approval that year, and changes expected to be in place before the 2028 local government elections. The proposals were submitted in August, but Local Government Minister Simon Watts and RMA Reform Minister Chris Bishop said in late September more work was required before Cabinet could make final decisions.
The business cases behind those proposals lean on scale, efficiency and removing duplication. The workforce reality is more complicated. In this article, I look at where reductions actually occur, why the savings arrive later and smaller than most business cases assume, and why leadership selection is the transition risk councils are least prepared for.
For most councils outside Auckland, the debate about whether to amalgamate is effectively over. What remains is practical: several operating councils have to become one organisation while still delivering services.
That means combining executive teams, finance and people functions, communications, policy and strategy capability, systems, employment arrangements and cultures. There will be duplication and some of it will go. I am less convinced the reductions will be as large, or as fast, as the business cases suggest.
Two reforms impact the same staff
Water reform removes a technically deep workforce and the management layers above it. Amalgamation then targets the corporate functions that remain. Both affect the same band of staff, tier two through tier four, in the same regional labour markets, within the same two years.
A council that’s already lost its three waters capability, and is now consolidating finance, HR, communications, policy and strategy with two or three neighbours, is not absorbing one restructure. It is absorbing two, and the people expected to deliver the second are still recovering from the first.
Where savings come from
Auckland is our most useful reference point. In the year to November 2010, the eight councils and organisations that became Auckland Council reduced from 9,430 full-time equivalent staff to 8,207 on day one, a cut of around 13 percent. The more useful numbers are underneath that headline, because the reduction was heavily concentrated in management.
That last row is the important one. Combining councils doesn’t halve the number of building consents, roads, libraries, parks, customer enquiries or regulatory obligations. Nearly all the operational workload survives. The duplication that can be removed is in management and in enabling services, where several organisations keep separate finance, people, communications, policy and governance functions.
Two things follow. A business case that assumes a flat percentage reduction across the whole workforce will not hold up once it’s applied to the actual organisation. And the people carrying the largest share of the cut are the same people who have to run the transition.
Don’t bank the savings too early
New South Wales is the clearest warning available. Following the 2016 amalgamation of 42 councils into 19, the NSW Auditor-General found that benefits plans in three of the new councils didn’t anticipate material savings from workforce reform in the first three years. Estimates were revised down sharply: Inner West from $88 million over 20 years to $60 million over 10.
The reasons were practical. Councils first had to settle service levels, align employment arrangements, integrate duplicated IT systems and complete organisational design and internal recruitment. Statutory staff protections were the biggest constraint on pace: non-senior staff couldn’t be made redundant for three years or relocated outside their former boundaries, and vacancies had to be advertised internally first.
New Zealand hasn’t settled the equivalent question. There’s no enabling legislation for this programme yet, so the employment protections that will apply are undecided. That single setting will do more to determine the shape and timing of workforce savings than anything in the business cases being read by Ministers.
Auckland’s reduction was real but not permanent. Group FTE was back above the pre-amalgamation total within about two years and reached 11,181 by 2021/22, against 9,430 before, driven largely by population growth. Amalgamation resets the baseline once. It does not change the growth trajectory.
The leadership risk nobody’s costing
If three councils amalgamate, there may be three CFOs designing one finance function, several people leaders designing one structure, and multiple chief executives contributing to a transition that will require one. They hold most of the knowledge needed to make it work while carrying the greatest personal uncertainty.
Of the 19 interim general managers appointed in the 2016 NSW amalgamations, only three were still in the role by the 2019 audit, with an average tenure of under 18 months. North Yorkshire, which brought eight councils together in 2023, appointed its chief executive early enough to shape and select the tier two and three structure.
The chief executive profile an amalgamated council needs is also not the one that ran the legacy councils. As I said in LG earlier this year, the role is now geared towards community and development partnerships, negotiation across entities, including the new water organisations, and internal system performance. Selection should be against that future profile, not seniority in the largest legacy council.
What happens to those who leave
Councils amalgamating in one region release similar capability into the same market at the same time: three senior HR roles, several communications and strategy teams and three executive structures. The new organisation won’t want all of them.
That’s different in Timaru, Whakatāne or Whangārei than in a large city, where a displaced senior manager may have invested 20 years in one region and few comparable employers are within commuting distance.
Wellington recently showed what happens when many similar professionals enter one market at once. SEEK reported job advertisements there were down 42 percent year-on-year in May 2024, compared to a 30 percent drop nationally. The capital didn’t record year-on-year growth in advertised roles again until around May 2025.
Regional absorption takes years, not months, so sequencing exits in tranches matters as much as the support offered. Most displaced employees keep living in the communities the new council serves, so a poorly handled restructure leaves a legacy past the final redundancy payment.
The real amalgamation task
Amalgamation can create real opportunity. But the evidence from Auckland, New South Wales and North Yorkshire points one way. Workforce savings are more concentrated, slower and less permanent than a merger business case implies, and the transition succeeds or fails on people rather than structure.
Three things would improve the odds:
Build the workforce dataset now, before decisions land rather than after.
Appoint the chief executive early, against the post-water profile rather than legacy seniority, and give them the tier two and three structure to design.
Plan and sequence the exits, with transition support costed into the programme rather than found at the end.
Boundaries, representation and governance will take most of the attention through detailed design. Those decisions create the new council legally. Getting the people across the boundary is what will make it work.
Turning vision into reality