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Minister for Building and Construction Maurice Williamson says he is disappointed southern councils commissioned and released an economic impact report on the Government's proposal when no policy decisions have been made.
But the councils say they are releasing the best available information they have in the hope sensible decisions will be made.
Councils south of Timaru yesterday revealed their estimate of the costs to their communities of the Government's current proposal to improve the system.
Ten of the 11 district and city councils south of Timaru banded together to pay for the analysis.
Dunedin Mayor Dave Cull, who officially released the results on behalf of the group, said the analysis was indicative and based on the broadest understanding of the proposal, so was likely to be a worst-case scenario given no decisions were made.
However, it was necessary to ensure the Government had a clear understanding of the potential impacts on rural and provincial areas of such proposals.
''This is one of the biggest issues to face councils, building owners and the wider community in a generation ...''
The study backed southern councils' significant concerns about the proposals, he said.
They believed they did not taken into account the impact on areas with large numbers of older buildings which would not be economically viable to strengthen because of limited opportunities to recoup costs through raised rents.
The desk-top analysis was done by Arrowtown consulting firm Rationale. It based estimates on QV data supplied by the councils and used a formula developed by structural engineers.
Low-use buildings, such as shearing sheds and hay barns, were included in the study, because the proposals did not allow for any exclusions.
The Government has estimated about 25,000 buildings across the country will need upgraded to meet at least 33% of the new building standard, at a total cost of about $1.7 billion.
But southern councils believe there are up to 22,600 rural and urban buildings south of Timaru alone that will require assessment under the proposed changes, including more than 7440 that will either need to be demolished or strengthened.
They estimate it could cost councils up to $30 million to undertake the proposed seismic capacity assessments over a five-year period - a cost which would have to be recovered in rates or user charges.
They also estimate the upgrading of affected buildings could cost building owners $1.77 billion in the southern South Island alone, including $555 million in Dunedin.
Mr Cull said the councils believed the existing proposals were unaffordable and unfair on their communities.
They had serious concerns about how councils would pay for the assessments.
The proposed upgrade time frame of 10 years was too short and could force businesses to close, relocate or demolish, resulting in a loss to the region of commerce, services and heritage buildings, he said.
They wanted a more targeted, risk-based approach, short-term targeting of building elements such as parapets and longer time frames for full building upgrades.
A one-size policy would clearly not fit all areas, and local variables in any policy were required, he said.
Mr Williamson said he was disappointed the councils had released figures based on the worst-case scenario.
''I don't think that's helpful. Of course, we won't be going to that extent ... There will be exemptions, but we still need to determine how far they go.
''We should not be getting carried away with absolute numbers at this stage, because the information base is appalling.''
He personally agreed the five and 10-year time frames were too tight.
Central Otago Mayor Tony Lepper, whose district could be in for up to $155 million in upgrade costs, said it looked ''horrible'' on paper.
''Even if we have the figures slightly wrong, it still looks horrible, so we'll need to get a favourable response from the Government.''
Southland Mayor Frana Cardno was reported as saying she did not know how small communities would cope with the burden.
Queenstown Lakes Mayor Vanessa van Uden said her council was not part of the group, because it felt it already had enough information about its building stock and what needed doing.
Mr Cull said the study's conclusions were not a challenge to the Government.
''We are not saying they have got it wrong. It's really showing the implications that need to be fed into the policy.''
The study will form part of a joint submission from the southern councils on the proposals.
Councils will also make individual submissions.