Forced council amalgamations;

Forced council amalgamations; Part One- Do they deliver?

By ‘The Contrarian’

The planners of compulsory and voluntary council amalgamations have argued that “bigger is better” in local government. Ratepayers are told these amalgamations will give them lower rates, cheaper and better quality services, enhanced financial viability and top-quality administration and planning.

But is that what they get?

In NSW, the Baird Government has particularly stressed the financial benefits of council amalgamations. These claims have typically presented as the outcome of careful research and deliberation although critics argue this is the exact opposite of what has happened.  Recent events suggest that there may be more than a grain of truth to the critic’s claims.

There is mounting evidence from studies of forced amalgamations in other States, such as Queensland for example, to the effect that claims about lower rates, enhanced financial viability, better services and better planning and administration automatically resulting from forced mergers is not correct.  In fact a study by Joseph Drew, Mike Kortt and Professor Brian Dollery established the forced mergers in Queensland ensued in a greater proportion of councils displaying “diseconomies of scale”. That is, the mergers created entities that were simply too large to be run efficiently.

What is more, of the 31 new councils the Queensland mergers formed, 58% exhibited decreasing returns to scale. Comparing their efficiency through time, the researchers found merged councils performed worse than unmerged councils.  Similar reports on forced amalgamations elsewhere in Australia and New Zealand have also emerged.

Hardly a ringing endorsement!  So the question has to be asked; “Is the Baird Government’s policy one that is based on solid empirical evidence”?

The NSW Government points to the IPART Report released last October looking into how many NSW Councils met their Fit For The Future Criteria and highlight that about 60 per cent of the state’s councils were not “fit for the future” according to IPART’s criteria as set out by the NSW Government.  The very same criteria Professor Dollery and his other co-researchers have found to be questionable over three separate reports and papers.

So on ‘Fit For The Future’ grounds alone there are reasonable questions as to the efficacy as to what the NSW Government is proposing with its now forced amalgamations.

But are they the only problems with what the NSW Government is currently doing?  Hardly, the recent sacking of 42 Councils mostly, but not solely, in Sydney has led to accusations of administrators being appointed who are too close to developers and controversial developments.  Terms such as ‘Dictator’ and ‘Dirty Government’ have been thrown around.  Accusations of ‘presumptions of Corporate Government’ and “obsessive secrecy” have been aired.  The behaviour of some protestors has been passionate and some less than exemplary and downright disgusting.

It didn’t need to be this way.  There are other ways of making savings and giving ratepayers a ‘better bang for their buck’ while also ensuring democracy is alive and well at local government level.  I’ll cover these in my next piece.  Some amalgamations can work, given certain criteria.  There are alternatives to amalgamations too.

As was rightly pointed out here at Coffs Outlook recently the Coffs Harbour Council, “along with Bellingen, Nambucca Heads and Grafton councils were part of the original proposal to merge as one” Council under ‘Fit For The Future.’  That may still yet happen.

Coffs Harbour City Council’s administration challenged the proposed amalgamation.  The same article rightly asked “why was Council so determined to challenge the merger proposal?”

As I’ll argue in part two of this column it was highly unlikely to have been for the right reasons or to have offered the right alternatives.

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