Lots of carrots for fewer councils: NSW Government responds to the Local Government Review Panel Proposals

It’s been a long time coming but the State Government has finally announced its response to the Independent Local Government Review Panel’s findings and recommendations.

The Panel’s report was completed in October 2013 but its release was delayed until January this year, with councils given a further opportunity to lodge submissions. The government’s response was further delayed by a change of Premier and subsequently planning minister and there was speculation that the government might shelve the reform process at least until after the next state election.

However this week – nearly 12 months after the Panel finished its work – the Premier has announced the ‘Fit for the Future’ (FFTF) package. The package involves some fairly substantial carrots, the most significant being $258 million to “assist councils who decide to merge and make the changes needed to provide better services to communities”.

FFTF website

The following summary has been compiled from a number of pages and documents on the FFTF and associated websites (see the end of this post for the list). The package comprises $153m for Sydney councils and $105m for regional councils; in the metropolitan area newly merged councils with a population over 250,000 will receive $10.5 million with an additional $3 million for every additional 50,000 people up to a maximum of $22.5 million (ie, for a council with at least 350,000 people). In rural areas any two councils merging will receive $5 million, three councils $11 million and for $13.5 million, all regardless of size. The government has declined to nominate a target for the number of amalgamated councils in either the city or the country.

Councils are also offered “cheaper finance for councils to build and maintain the facilities that communities need”, saving them up to a claimed $600 million and up to $100 million savings through “reductions in red tape and duplication”. An additional $13 million will also be available to “support local transition committees and ensure elected representatives are involved in the merger process.”

There are also a number of changes to the “local government system”, including to legislation, the state government’s interaction with councils and the support that it provides to local government. In relation to the legislation the government’s response indicates that it “broadly supports” the recommendations of the separate Local Government Acts Taskforce and intends to develop a new Local Government Act to be phased in from 2016/17.

However in the short term it will amend the current Act to remove a number of the current restrictions on tendering. These changes include the delegation of the acceptance of tenders to support regional procurement and lifting the prescribed tendering threshold for councils to $250,000 to align it with the State Government tendering threshold. However the wording of this point suggests this increased threshold might only apply to ‘fit for the future’ councils, i.e., ones that have gone through the FFTF reform and amalgamation process.

The government has also supported the Panel’s recommendations to establish Joint Organisations (JOs), at least for rural councils. The government will provide $5.3 million or $300,000 each to fund 15 JOs outside the metropolitan area. The rationale for the JOs is drawn directly from the Panel’s proposals:

They will be empowered to bring all councils in defined regions together to discuss and agree to strategic regional priorities for their communities. They will also create a mechanism for State and local Government to collaborate on agreed priorities in a more consistent, structured and effective way than ever before.

The JO option will not however be extended to metropolitan councils, where the government has made it clear its preferred option is amalgamations. Clearly this approach is favoured in rural areas as well, but the JO proposal confirms the Panel’s view that amalgamations will not always be appropriate in regional areas where distances and low densities make the economics of amalgamation more elusive. In the metropolitan area the government has “supported in principle” the Panel’s proposal for the establishment of a Metropolitan Council of Mayors but is somewhat vague on the details.

In the next few posts I will consider some of these responses in more detail, drawing on the fairly extensive documentation available on the FFTF website. Here are some of the key websites and publications:

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