He warned at a council committee meeting yesterday that provisions in a proposed Bill could spark "unprecedented'' central government interference with local government, including in Otago.
"I have serious concerns.''
Dunedin and Otago people, "if they value the ability to be involved in local decisions'' should also be concerned, he said later outside the meeting.
People elected within the region made decisions about many water management and roading matters, but some of the decision-making powers could be taken away.
"We're not the puppet on the string for government. We are a form of government - local government,'' he said.
The Local Government Act 2002 Amendment Bill (No 2) was introduced to Parliament last month, and public submissions on the Bill close next Thursday.
Councillors yesterday decided to make a submission.
Mr Woodhead said some proposed provisions could result in local authority amalgamation by stealth and significant powers being taken away from some institutions,
An ORC report summarising the Bill's provisions points out that a clause requiring "demonstrable community support'' for a reorganisation had been removed.
The Bill aims to implement a series of reforms to enable improved service delivery and infrastructure provision arrangements at local government level.
The ORC report highlighted proposed greatly increased powers for central government involvement in local government matters, and a big increase in the powers of the Crown-appointed Local Government Commission, including to investigate local government reorganisation itself.
Mr Woodhead, who also chairs the Local Government New Zealand regional sector grouping, told the ORC finance and corporate committee that he agreed with several elements in the Bill, including the Crown's wish to encourage greater efficiencies within local government through a more collaborative approach.
The Bill proposed to increase the scope of local government reorganisation, and to increase the powers of a territorial authority to take on the responsibilities and powers of a regional council, as a unitary authority.
Cr Trevor Kempton said the Bill contained some potentially "subversive'' provisions.
And it seemed particularly "perverse'' if one of several territorial local authorities operating in a region was to take on some of a regional council's wider powers, Cr Kempton said.
Cr Michael Deaker said he was "appalled'' by some of the proposed provisions and said the more he read about them "the more horrified I became''.
