NSW govt gets its way on council merger report, 63% ‘unfit for the future’

By Harley Dennett

Wednesday October 21, 2015

The controversial process used by the New South Wales government to advance stalled local council amalgamations has delivered the result Premier Mike Baird wanted: a report that will embarrass many of the 140 councils that refused to merge.

The Independent Pricing and Regulatory Tribunal on Tuesday released its assessments of councils’ “Fit for the Future” proposals, stressing that it was not proposing mergers, but merely judging the submissions against the state government’s criteria. The premier, however, said it was the end of the road, and he was “determined to get on with this.”

When the NSW government first began pushing for mergers, only five councils put up their hands. A great many more have done so as this process unfolded, but only four council merger proposals passed the criteria though:

  • Randwick and Waverley (not precluding the option of a later merger with City of Sydney)
  • Auburn, Burwood and Canada Bay
  • Young and Boorowa
  • Cootamundra and Harden

IPART chair Dr Peter Boxall said better configurations were not available as neighbouring councils would not consent.

An additional 48 proposals from councils proposing to stand alone were deemed “fit” under the government’s criteria.

However, 87 proposals were assessed as not fit, mostly due to not meeting the “scale and capacity” rather than failing the financial criteria. Even the highly profitable City of Sydney failed to meet the “global city” criteria by itself, and will be encouraged to merge with neighbouring councils. Boxall said it wasn’t all about minimum population thresholds:

”As we have said from the outset, our assessment of scale and capacity is about more than population and, in making these assessments, we have considered the Independent Local Government Review Panel’s preferred option and whether the proposal demonstrates the council can achieve the key elements of scale and capacity.”

“Despite smaller populations, more regional councils were assessed as satisfying the scale and capacity criteria than metropolitan councils because the ILGRP’s preferred option for regional councils recognised the local circumstances and in many cases did not propose a merger.”

Why merge?

IPART gave a number of justifications for rejecting metropolitan council’s stand-alone proposals on “scale and capacity” grounds:

  • A merged entity would have greater scale and strategic capacity to better partner with other levels of government in providing key infrastructure and social services.
  • A merged entity could better integrate planning and development, resulting in improved planning decisions and enhanced economic growth.
  • The merger option and the business case for the merger commissioned by the council showed substantial gains. Despite this, most councils did not submit a Merger Proposal.
  • Our analysis and the analysis undertaken by our independent economic consultants, Ernst & Young, indicated the merger option would provide large net benefits to the local communities.
  • The council’s proposal to remain a stand-alone council was not at least as good as the preferred merger option.
  • The efficiency improvements in the council’s proposal could be realised under the merger option, and the merger option could provide significant further benefits to residents.

Non-metropolitan councils proposals were mostly rejected because they showed a likely deficit in the benchmark year of 2019-20.

Local Government NSW association president, councillor Keith Rhoades has been concerned about the lack of process going forward. Both Baird and Local Government Minister Paul Toole have ruled out taking unilateral action to merge councils.

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