This chapter discusses system and structural innovations in rural local government within Australia and New Zealand, focusing on capability building, amalgamations (mergers) and collaboration (inter-municipal cooperation). It identifies the primary themes driving reform, such as shifts in community expectations, challenging financial positions, the need for local governments to provide ‘local voice, local choice’, difficulties in delivering key services, and challenges in attracting and retaining talented staff and councilors. Many rural councils in both countries are attempting to deliver more comprehensive services while simultaneously experiencing funding shortfalls and operating without an overarching policy framework to guide them. Rounds of amalgamations have often failed to have the desired efficiency effect and councils are increasingly turning to voluntary systems of cooperation, including through the formation of joint organizations, to create economies of scale and drive improvements in capacity and capability. Such voluntary cooperation has proven successful in certain areas, such as waste management and the provision of library services. However, it remains to be seen how and whether the trend of increasing cooperation can offset deep-seated structural challenges and meet ever-evolving community expectations of local government.