More than 1500 local body employees in Auckland are likely to lose their jobs in the merger of eight councils into one.
The agency creating the new Auckland Council says the bill for redundancy payments could reach $20 million.
About 650 workers who couldn't be found jobs will be told this week. The Auckland Transition Agency - which is creating the council - says at least 600 more will be out of work when their fixed term contracts end, while 300 others have been given extensions of up to 20 months.
The agency's executive chairman, Mark Ford, says the redundancy costs are reasonable compared to the expected savings and efficiencies in the future.
Mr Ford says the region's local body workforce will have reduced to less than 8000 by mid-2012 from nearly 9500 a year ago.
Maybe more yet - minister
Local Government Minister Rodney Hide says the job cuts may not be the end of the downsizing.
"We think it could go further," he says, "but that'll depend on the people of Auckland, if they want to keep their rates down, really."
Mr Hide says the redundancy costs will be offset by an eventual $90 million annual saving in wages.
Public Service Association general secretary Richard Wagstaff told Morning Report the job losses are one of the biggest single cuts in the public sector in recent years.
He is concerned, he says, about talk of the potential for more job cuts in a further review in 18 months.
The Labour Party says the agency has treated council staff shabbily by announcing the job losses in the media. Auckland issues spokesperson Phil Twyford says it could have waited until letters had been sent out first.
The new Auckland Council comes into existence on 1 November.