Fit For the Future: Can the Government really amalgamate a sense of community?

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Released in October 2015, IPART’s review in to the Fit For Future initiative called for the amalgamation of 87 local council areas across New South Wales. The initial amalgamation idea was met with derision at a local council level, with claims that to do so would; make the areas unable to be effectively managed, cost local jobs and increase local council rates.

The Baird Government has disputed these claims however, announcing a series of benefits to the new councils including:

• Funding of up to $15 million for each new council to invest in community projects like junior sporting facilities, playgrounds, libraries or local pool upgrades;
• Funding of up to $10 million to streamline existing administrative processes and cut red tape, with unused funds available to be redirect to community projects; and
• Legislating to protect against rate increases to ensure rate payers will pay no more for their rates than they would have under their old council for a period of four years.

The decision to create the new council areas was made after four years of extensive consultation with communities and councils, as well as independent research and analysis which found the only way to move forward was to reform New South Wales’ local government structure.

Despite local resident concerns, New South Wales Premier the Hon. Mike Baird and New South Wales Minister for Local Government the Hon. Paul Toole announced on the 12^th of May 2016 the establishment of 19 new councils. In a press release, the Premier and Minster for Local Government said “…. NSW today will work harder for residents and deliver better services and community facilities…”

“The most comprehensive local government reform in more than 100 years will result in 19 new councils beginning operations from today,” Mr Baird said.

The announcement, while expected, received a mixed response from the community, particularly in light of the termination of existing councillors and mayors, with the 19 new councils to be managed by an Administrator and an interim General Manager until new local council elections are held on September 9^th 2017.

Amalgamation: Easier said than done

The first meeting of the new Inner West Council erupted into turmoil on the 23^rd of May when dismissed mayors and Councillors seized control of a Sydney council chamber after hundreds of protesters caused the meeting to be shut down early.

The new Inner West Council was formed by the amalgamation of Leichhardt, Ashfield and Marrickville, with residents of those areas so unhappy with the way the amalgamation process was handled by the State Government, the meeting was unable to get through the Acknowledgement of Country ceremony.

The Administrator of the Inner West Council, Richard Pearson, had to be escorted from the chamber by NSW Police as protesters turned violent, with one woman spitting on him as he left the room and another protester grabbing at Mr Pearson’s council documents and iPad before throwing them away from Mr Pearson.

In all the turbulence, the former mayors and Councillors (who had previously been sacked by the Premier) grabbed the microphone, declaring the inner west would be “ungovernable” and “unworkable” until they were reinstated to their positions by the Premier.

Whether there will be any repeat of last week’s protests remains to be seen, however the removal of the existing councillors and mayors from Leichhardt, Ashfield and Marrickville suggests regardless of public opinion the Baird Government will continue to move ahead, as planned.

“Councillors who have shown a commitment to making the new council a success will have the opportunity to get involved,” The Premier said on May 12^th. “The New South Wales Government is committed to the successful implementation of new councils and central to this is local knowledge and representation.”

“Mayors and Councillors selected by administrators to be on these committees will continue to be paid at the same level, in recognition of their efforts and dedication in shaping the future of those new councils.”

“The Local Representation Committees will be established by the independent administrator in each new council and provide an opportunity for Councillors to serve the interests of their community until the election next year,” Mr Toole confirmed.

A lesson from New South Wales’ History

But these aren’t the first local government amalgamations in New South Wales. In 2004 the former Labor Government sacked two inner-Sydney councils (city of Sydney and South Sydney) in order to create a super council.

In defending the move, called a power grab by some (similar motivations have been aired in light of the current council sackings), then Labor Local Government Minister, the Hon. Tony Kelly said;

“We put the councils on notice in June last year (2003) if they didn’t reform themselves then the Government would have to step in.”

At the time the Opposition’s Local Government spokesman, Andrew Fraser, claimed it was proof if councils didn’t agree with forced amalgamations, they’d be sacked.

“The price of democracy,” he said at the time “is eternal vigilance.”

Is Bigger really Better?

The concept behind the local council amalgamations is the adage, ‘Bigger is Better’, but is that really the case?

In 2008, the Queensland State Government amalgamated their local councils from 157 to just 73. Research undertaken by Brian Dollery, Professor of Economics and Director of the Centre for Local Government at the University of New England and his colleagues found after the forced amalgamations in Queensland, a greater proportion of councils were exhibiting dis-economies of scale, as the mergers had created entities simply too large to function efficiently.

In an article published on The Conversation in March 2016 (Do mergers make for better councils? The evidence against ‘bigger is better’for local government, March 31, 2016) Professor Dollery’s research indicated that of the 31 new councils the mergers had created, 58% exhibited decreasing returns of scale. Comparing their efficiencies through time, the research also showed the merged councils consistently performed worse than the un-merged councils.

It’s not just academics who have advised the Baird Government to be careful about the move to forced amalgamations. Former Ministers on both sides of the Queensland political divide have produced a report saying “many councils in Queensland are still paying a high price” for mergers that were not well planned.

The 2008 forced mergers in Queensland were considered a success, however several were de-merged in 2014 after relentless local campaigns. The report by former Labor Minister for Government Services Simon Finn, who oversaw the Queensland mergers, and former LNP Local Government Minister David Crisafulli, who ordered the de-amalgamation of four merged councils, warned against unrealistic expectations.

“Newly created councils should not seek to realise economic benefits immediately at the expense of creating a new cohesive community,” the report states. “There will be no long-term economic benefits if the communities are ungovernable because of division.”

The report further stated that Queensland saw the greatest resistance to amalgamation in the smaller communities fearful their services and voice would diminish in the hands of a larger community. This fear was realised as local service centres were closed, giving the communities the impression local service delivery was no longer a priority to the new council.

“While the economic assessment made sense, the changes immediately impacted on the proposition of a united region and sowed the seeds for ongoing distrust.”

Economy verse Community

Making decisions based on economic values is one thing, but with the forced amalgamations already creating significant discord in the affected communities, it is incumbent on the Baird Government to clearly inform the communities their voices have been heard.

While the Minister for Local Government, Paul Toole has said there are vast differences from the QLD mergers and the New South Wales ones citing caps on rates and extra funding, these focus on the economic rather than social outcomes, failing to address the social consequences to the communities.

Mr Crisafulli said in an article on the ABC website at the time the report was released that “Things that appear to be economically smart can be socially dumb, and if you don’t get the mix right you will not take the community on the journey. If that happens, they won’t be a success.”

As shown by the successful Queensland mergers, the mergers work only when you have strong local leadership and local views factored into the decision making process.

“In other cases, where that wasn’t the case, where the small things continued to fester, we had a situation where communities grew more and more passionate about getting their Shires back as the years went on,” he said.

It would appear – at least if the new Inner West Council is any indication – that reducing the number of New South Wales local councils through amalgamation may be the easier part of the whole process. Amalgamating the communities into a cohesive community however, could be something altogether more difficult. 

Mike Cullen has recently returned to Akolade after a period as the conference producer for one of Australia's leading economic think tanks. Mike began working in the conference industry in 2007 after looking for a career change from the high pressured world of inbound customer service. Mike has worked for some of the most well-known conference and media companies in the B2B space and in his spare time is working on his first novel in a planned Epic Fantasy trilogy.

Mike’s most recently published story, Seeds of Eden, is featured in the Sproutlings Anthology released in March 2016.