Last year, the residents of the Hawkes Bay region dodged a bullet. They were not the only ones. Northland and Greater Wellington also had a close shave with this regulatory projectile.

The name of the bullet was amalgamation.

That is one of the main take-outs from the Initiative’s latest report The Local Benchmark: When Smaller is Better, which profiles local government in Canada, the Netherlands, Switzerland and the United Kingdom.

It is the Montreal case study that reveals just how lucky our bullet-dodging regions were.

Quebec’s provincial government looked at the city’s municipalities and got concerned that their fragmented structure was dragging on competitiveness. From its higher perch, the plethora of municipalities certainly looked wasteful, with 28 town halls, 28 mayors, and 28 sets of councillors.

How much easier, cheaper and efficient would it be to have one authority make all the decisions and provide all the services? Plus, there would be economies of scale and savings aplenty from headcount reductions. And so in the early 2000s Montreal’s 28 municipalities were merged into a “super city”.

Only it turned out the city was not that super. It cost C$473 million more to run Montreal in 2005 than it did in 2001. Over this period the merged city added 400 people to its workforce instead of delivering on the promised 1,700 headcount reduction.

What went wrong? The answer is amalgamation destroyed municipal competition.

Where before wages were kept in check by individual negotiations with each municipality, now unions could focus their efforts on one set of officials. And where municipalities used to decide their own service levels, such as library hours, now they were set by the inner city.

This is the competitive part of local government that officials often overlook when prescribing bigger-is-better policies. They focus on the small costs at the expense of large benefits.

We at the Initiative believe that local government can be more efficient, and that the sector can help improve New Zealand’s economic competitiveness - but only if we embrace competition, instead of trying to systematically eliminate it.

We know it works because we have seen it firsthand in Switzerland, the Netherlands, and increasingly the UK.

But for details you will have to wait for Monday, when our report is released in a keynote address at Local Government New Zealand’s annual conference. Expect bullets to fly.