Testing the numbers on Council restructure options

Environment Southland has developed a financial model to test the costs and savings of local government restructure options for the region.

Chair Jeremy McPhail said it’s very difficult for councils and Southlanders to make informed decisions about what’s best for Southland’s future when they don’t have reliable numbers to work with.

“We want to contribute meaningfully to the conversation with a sound financial model that can test different scenarios and provide a clearer understanding of the financial implications.

“The results in the model will vary depending on the underlying assumptions and we are working through those with the other Southland councils, at the moment, to ensure they are robust.

“We’ve had the model independently audited, and while it’s early days, some insights are emerging.”

Early insights:

• The model highlights that the biggest pressure on rates sits not in operating costs, but in ongoing infrastructure investment and asset renewal.
• Within that context, savings from amalgamation are likely to be modest and realised over the longer term, rather than immediately.
• Transition costs, such as aligning systems and workforce changes, are likely to be significant and front-loaded.

The model currently considers four local government restructure options, but we are working with the other councils to identify any further models for testing.

The four restructure options currently being tested are:

1. One Unitary (single unitary authority – Environment Southland, Gore District Council, Invercargill City Council, Southland District Council combined).
2. Two Unitary councils (urban (Invercargill City Council), and rural (Southland District Council & Gore District Council)) each with regional council functions (Environment Southland) e.g. flood resilience, catchment management and biosecurity).
3. Two Councils + Regional Business Unit (urban (Invercargill City Council), and rural (Southland District Council & GDC)), + business entity delivering regional functions (Environment Southland) e.g. flood resilience, catchment management and biosecurity).
4. One Council + Regional Business Unit (Gore District Council, Invercargill City Council, Southland District Council combined + business entity delivering regional functions (Environment Southland) e.g. flood resilience, catchment management and biosecurity).

An understanding of regional council functions and how these could potentially work under different scenarios underpin the model. Functions such as flood resilience, catchment management and biosecurity don’t stop at district boundaries. To be delivered effectively, they need to be managed and responded to, at scale – catchment and regional. Together these functions build resilience and are essential for the Southland’s economy and lifestyle.

The Council is receiving an update on local government reorganisation, including financial model work, at its Council meeting on Wednesday (24 June 2026).

Note: The tool Environment Southland has created is an indicative model built from the published long-term plans, funding impact statements and water service delivery plans of the four Southland councils. It is transparent by design, and is intended to test assumptions, not pretend to already know a final answer. Environment Southland acknowledges that regional councils have no decision-making role in the Government’s Head Start process, but we can support the process in Southland with our regional perspective, analytical expertise and knowledge of our functions.