NSW government push to amalgamate councils goes awry

The Independent Review Panel’s final report into local councils was released in October 2013 and recommended amalgamations of councils among other things. In September 2014 Premier New South Wales (NSW) Premier Mike Baird, announced his Fit for the Future package that included funding of up to $1bn including cash incentives as sweeteners to merge.

It included: $258 million to assist councils who decide to merge and make the changes needed to provide better services to communities ($153m for Sydney councils and $105m for regional councils) and $13 million to support councilors who “lead the transition to a new council”; Cheaper finance for councils to build and maintain the facilities that communities need, saving them up to $600m; Up to $100 million savings through reductions in red tape and duplication; And improvements to the local government system, including the laws that govern it, the way the State works with councils and the support that councils receive.  

The cheaper finance portion would only be beneficial if a council borrowed money from the NSW government of which it would probably receive a dividend meaning the $600m would most likely be covered by other councils and not the state government. President of Local Government NSW, Cr Keith Rhoades said “While there are many aspects of this reform package that councils agree with, the NSW Local Government sector also universally opposed the recommendation in the final report of the Independent Local Government Review Panel about rural councils having their responsibilities and regulatory powers stripped back. We will continue to oppose the Government on this issue should they persist in paring back rural councils. Rural communities deserve the same level and quality of council services as their city counterparts – another fact.” 

Fit for the Future had the Independent Pricing and Regulatory Tribunal (IPART) assess whether councils were financially viable alone or whether they should merge with neighbouring councils. On the 20th of October this year IPART found that more than two-thirds of Sydney councils were unfit, as well as more than half of the regional councils. Only 52 of 139 proposals were accepted that were submitted by 144 local councils, including four merger proposals covering nine current councils. Most councils that wanted to continue to operate alone passed the financial criteria but not on “scale or capacity”, and the report found that amalgamations could deliver $2bn in savings over the next 20 years. Lord Mayor Clover Moore was quick to reject the finding and said: “To say the City is somehow unfit in the face of this strong evidence to the contrary makes a mockery of the entire review process, and throws into question all decisions made as a result.” The chairman of IPART interestingly is Peter Boxall, he was also a commissioner for the Abbott government’s Commission of Audit (COA).

An Upper House inquiry was set up to examine Mr Bard’s amalgamation push and it found yesterday that the process was flawed from the beginning, and that IPART was actually the wrong organisation for the job. “While IPART has significant capacity to analyse the finances of local government, it does not have the demonstrated skills or capacity to assess the overall ‘fitness’ of councils as democratically responsible local governments,” the report said. It also said that: “The scale and capacity criterion was a flawed criterion … and accordingly assessments of councils’ fitness based on this threshold capacity are not well-founded.” Committee member Peter Primrose, said that IPART’s findings were limited by the terms of reference. “It was a set-up from beginning to end” he said. “I don’t blame IPART. I blame the terms of reference which were handed to them by the Premier. “They had to find this illusory thing on the basis of this nonsense called scale and capacity.” The first of the 17 recommendations is “that the Premier and NSW Government withdraw the statements that 71 per cent of councils in metropolitan Sydney and 56 per cent of regional councils are unfit”. 

It also found that the Baird government should commit to no forced amalgamations of NSW councils unless they were bankrupt or otherwise unable to service their communities. Randwick council informed its residents that the NSW Government has made it clear that doing nothing is not an option. Randwick Mayor, Ted Seng said: “Randwick City Council already has a balanced budget and remains debt-free. Council is operating well and providing high quality services and facilities for our community,” And that “Unfortunately, despite Council’s excellent financial and asset management position, the NSW Government wants us to respond to the Independent Local Government Review Panel’s recommendations for ‘scale and capacity’.

It appears that the ‘scale and capacity’ part of the terms of reference, was almost a ruse to sneak forced amalgamations in. Randwick Mayor Mr Seng, also said that: “The Independent Review Panel’s final report released in October 2013 recommends an amalgamation with City of Sydney, Woollahra, Waverley and Botany councils – building a ‘global city’ with more than 500,000 residents. We don’t support the creation of a global city as we value our Randwick identity, local representation and existing quality services.”

I think we need to be celebrating our communities and their uniqueness and diversity not shunting them all into one basket under the banner of economics, the market or even efficiency. You cannot foster the innovation that this country is crying out for out of this ideology.

Councils have until the 18th of November to make a final submission to the NSW government.

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