Local Government Minister Rodney Hide says the new Auckland Council was never created to save money, but he expects it will.
Parliament passed the third and final piece of super-city legislation on Thursday.
Labour MP Phil Twyford estimates redundancy payouts will amount to $47 million when the eight current councils merge.
But Mr Hide says those costs are the responsibility of individual councils and will not feature in the super-city's budget.
He says the Transition Agency has not yet calculated what the cost of redundancies will be and Labour's claim is total mischief.
Mr Hide told Morning Report the main aim of the new council is to have unified and decisive leadership. He said there will be savings in operating costs.
The new Auckland Council comes into being on 1 November. It will replace eight existing councils. The cost of the transition will be $160 million.