The local government reform Sydney needs to beat out Melbourne

By David Donaldson

September 26, 2014

As New South Wales begins the agonising task of redrawing the local government map, a warning that Sydney needs to improve its metropolitan governance to avoid falling behind Melbourne.

Roberta Ryan, director of the Australian Centre of Excellence for Local Government and UTS Centre for Local Government, says the Harbour City has been losing global competitiveness to its better-run southern rival. “Local and state governments in Victoria have historically been better at working together than those in New South Wales on service delivery and infrastructure,” she told The Mandarin.

The NSW government will provide financial incentives and practical support to rural or city councils that opt to amalgamate, under its Fit for the Future deal. The offer follows a review led by Graham Sansom into the sustainability of the state’s local government sector, which argued that in Sydney, “the structure of local government has been largely ‘snap frozen’ for more than half a century”.

Premier Mike Baird says the changes are aimed at addressing the sector’s $280 million deficit. “These councils are losing $1 million a day. That’s unacceptable, it can’t go on,” she said.

NSW currently has 152 councils, compared to 79 in Victoria and 73 in Queensland. The Sydney region alone comprises 41 local government areas.

The Baird government’s offer of incentives for voluntary amalgamations — a strategy also being used in Western Australia — appears calculated to head off the type of opposition seen in the Victorian and Queensland forced amalgamation programs, though the Premier has refused to rule out compulsory mergers down the track.

Ryan thinks NSW has learned some of the lessons of previous amalgamations in other states. “The interesting thing is they’ve offered not just financial packages, but also capacity building and support for facilitators in setting up new organisations,” he said. “Amalgamations fall over as often over the implementation, over personalities and politics, as over financial problems.

“It’s a quite comprehensive approach, though time is tight, and with these things the devil is always in the detail.”

Ryan says generalisable evidence on the benefits of amalgamations is mixed — baseline data is thin on the ground — but “there are clearly some metropolitan councils that could amalgamate, where the existing scale and borders are awkward”.

There is another potential model for reforming Sydney’s governance: the City of Brisbane, which covers around half of the city’s population — as many people as Tasmania, the Australian Capital Territory and Northern Territory combined — and administers a budget of around $3 billion.

Ryan argues Brisbane City Council “has been incredibly effective. Not only is it the largest council in Australia, it’s always one of the most well-run, and has worked well in terms of efficiency and responsiveness”. But she’s cautious about whether the model could bee replicating, pointing to Queensland’s wider local government regime, with more powerful mayors, which may be part of the reason for Brisbane’s success.

She adds that amalgamations are not the only tool for improving metropolitan governance, citing the recently signed Victorian State-Local Government Agreement. Another example is shared libraries, which deliver better services for lower cost, and can be implemented independently of amalgamation.

Losing democratic representation through amalgamations is a frequently cited concern among the public. The desire to maintain representation can be driven by the need for services in lower socio-economic areas, though it can also lead councils to spurn co-operation in ways that undermine benefits to the wider urban area — inner-city residents in wealthy suburbs, for example, have often used clout over small councils to block development.

While Ryan says there is not much evidence on whether amalgamations dilute democracy, “we’ve done some research which basically says when you have a more elaborate conversation, the community often see the benefits. When people see there might be some benefits to larger councils, such as lower costs or better services, they are usually fine with it.”

Past experience demonstrates the need to ensure buy-in when it comes to local government reform. Four Queensland councils de-merged earlier this year following forced amalgamations under Anna Bligh’s government in 2008, when the number of Sunshine State councils was reduced from 157 to 73. Such decisions can be expensive: it’s estimated the Noosa council’s secession from Sunshine Coast Council will cost at least $10 million of an estimated operating budget of $65 million.

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