Introduction

A recently released report found that the current local government model of 152 New South Wales councils was not sustainable in terms of financial and human resources1.  This article examines the State Government’s response, which includes an announcement of funding to assist councils to voluntarily merge.

Background

Earlier this month the New South Wales Government issued its response to the recommendations made by both the Independent Local Government Review Panel (the Panel) and the Local Government Acts Taskforce (the Taskforce).  The Panel’s focus was to develop options to improve the effectiveness of local government.  The review originally arose from the Destination 2036 initiative on how to meet the future challenges for local government

The objectives of the Panel were designed to review and provide recommendations as to how local councils can become “Fit for the Future”.  The Taskforce reviewed the Local Government Act 1993 and the City of Sydney Act 1988 for the purpose of making recommendations designed to make the legislation more efficient.The Panel investigated and identified options for finance and governance models, structural arrangements and boundary changes, and implementation.  The Panel considered:

  • the ability to support the current and future needs of local communities including regional, rural and metropolitan communities;
  • the ability to deliver services and infrastructure efficiently effectively and in a timely manner and to ensure the financial sustainability of each local government area
  • the ability for local representation and decision making; and
  • the barriers and incentives to encourage voluntary boundary changes, in line with the Liberal-National’s 2011 election policy of no forced amalgamations2

Subsequent media attention has focused on the decision of the Minister for Local Government, Paul Toole, to offer financial incentives, up to $258 million to those councils which do voluntarily amalgamate. 

Panel findings

The Panel found that there was clear evidence that 152 councils was not a sustainable model.  The actual conclusion reached by the Panel was that some amalgamations must be considered in the interests of improved local government.  It recommended that voluntary mergers be considered but, in addition, the Panel also made a recommendation that there should be a legislative process for considering potential amalgamations and boundary changes through an independent Boundaries Commission.  The State Government did not support that recommendation, in line with their 2011 election policy.


The Government’s proposal is to offer funds to assist councils who have decided to merge to make that transition and to provide services and facilities to enable the process.  Each council has been asked to review their situation and to submit their proposal on how they intend to become “fit for the future” by 30 June 2015.  If the proposal is to merge then appropriate funding will be provided. 

For Sydney and major centres, each newly merged council with a population of 250,000 will receive $10.5 million plus an additional sum for each addition 50,000 people above the initial 250,000, up to $22.5 million.  Once a merger is decided there will be a further $13 million available for the local transition committees and to ensure that the elected representatives are a part of the process.

What happens next?

As mentioned above, Councils have until 30 June 2015 (beyond the next State election) to submit their “fit for the future” proposals.


Although not yet addressed by the State Government, if none or only a few of the councils take up the offer to merge voluntarily, it may be incumbent on the State Government to reconsider the requirement for compulsory mergers and/or for the need to consider the recommendation of the Panel to legislate a revised process for considering potential amalgamations and boundary changes through a Boundary Commission (albeit, as noted by the Panel, a reconstituted and more independent one).

The NSW Government Response to Fit for the Future can be found at www.localgovernmentreview.nsw.gov.au