Infrastructure Commission research on council size shows bigger isn't necessarily better

New research from the New Zealand Infrastructure Commission, Te Waihanga reveals bigger is not necessarily better – or worse – when it comes to the size of councils and their cost efficiency in delivering key services.



The report, Does size matter? The impact of local government structure on cost efficiency looks at three key areas that represent half of councils’ operating costs: road maintenance, building consents and council overhead costs.

It finds that the size of the population within a council’s boundaries neither increases nor decreases costs in these areas.

“New Zealand faces significant infrastructure investment needs, including at the local government level. We have to look for ways to build, operate, and maintain infrastructure more cost-effectively,” says Te Waihanga’s Director of Economics, Peter Nunns.

“At the same time, we also need to think about how to plan and provide regional infrastructure in growing cities where an increasing number of people are commuting across council boundaries. The New Zealand Infrastructure Strategy highlights a need for better coordination to address this challenge,” Nunns says.

Other findings covered in the report include:

  • Central government delivers a much larger proportion of total infrastructure in New Zealand compared to other countries. Our central government does more and our local government does less, compared to other high income countries. New Zealand local governments are also comparatively large relative to our peer countries.
  • While council size does not affect road maintenance costs, increasing population density through urban intensification tends to reduce per-person road maintenance costs. Higher traffic volumes increase road maintenance costs.
  • There are large variations in the cost charged by councils to process building consents for similar residential houses. No clear factor could be found to explain this variation.