NSW councils are critical of the Independent Pricing and Regulatory Tribunal’s (IPART) report that deemed them unfit according to the ‘scale and capacity’ criterion.
The Independent Pricing and Regulatory Tribunal (IPART) recommends “unfit” councils merge with counterparts to gain financial savings and operational efficiencies.
IPART found almost two-thirds of NSW councils do not meet the State Government's ‘Fit for the Future’ criteria. It labelled 71% of metropolitan councils ‘not fit’ while 56% of regional councils were on the same list.
The criteria used to judge a council’s fitness were: scale and capacity and several financial criteria including financial sustainability, infrastructure and service management, and efficiency.
Some financially fit councils that were deemed unfit because they did not meet “scale and capacity” believe this study was designed for councils to fail and force mergers.
However, the methodologies and evidence of “scale and capacity” used to conclude that mergers are better are not clearly defined, Local Government NSW (LGNSW) president Cr Keith Rhoades says.
Western Sydney Regional Organisation of Councils (WSROC) president Tony Hadchiti agrees.
“It’s not clear what are the actual efficiencies and savings for the proposed mergers of each council,” Hadchiti says.
“Scale and capacity” and the overall process is a farce, Phil Jenkyn, member for Save Our Council Coalition (SOCC) and Save Hunters Hills Municipality Coalition says.
However, it appears “scale and capacity” were the driving force behind IPART’s recommendations to the government, not financial stability. IPART failed around 43 % of the state’s councils for not having the “scale and capacity”, i.e. a large enough population, despite considering them financially adequate.
“The majority of NSW councils don’t have more than 250,000 residents, the scale and capacity threshold, even the Organisation for Economic Co-operation and Development (OECD) establishes the average population number in Australian metropolitan areas is 20,000,” Jenkyn says.
IPART has found mergers to improve “scale and capacity” deficits that will result in more effective and efficient service delivery, improved deliveries of major infrastructure, more integrated strategic planning and policy development, more effective partnering with government, and stronger advocacy for local communities.
Financially fit Strathfield Council issued a statement, which says:
“No verifiable data has been put forward by the state government to support the meaningless ‘scale and capacity’ criteria. IPART has assessed Strathfield Council as financially sustainable, efficient and addressing local infrastructure needs but because council did not submit a merger proposal it has been deemed to be unfit for the future.”
In a statement, NSW Premier Mike Baird says the mergers could result in better community infrastructure.
“The mergers could also free up to $2 billion over the next 20 years for NSW ratepayers, which could stabilise council rates and fund better services and new infrastructure for communities,” Baird says.
Merger alternatives to keep communities separate
An alternative to mergers could be for councils to share services and some are already doing so to gain efficiencies and savings, Jenkyn and Hadchiti say.
Services include and go beyond sharing HR, payroll, planning, and other services, Hadchiti says.
This alternative can be a way for councils to retain their identities, which the communities fear they may lose.
The NSW government does not understand what local government means and that “bigger is not better,” Rhoades says.
“There is evidence in Victoria and Queensland that amalgamations do not work, and councils had to be de-amalgamated,” Rhoades says.
A NSW Government spokesperson says the purpose of these mergers is for councils to increase their capacity to provide services for the communities that can unite them and forge relationships, not separate them.
However, Jenkyn says the mergers could destroy the sense of identity and belonging within each council.
NSW councils have until November 18 to submit their merger proposals.