Council amalgamations fail to be financially sustainable.

Posted by | November 10, 2014 | News, Research | No Comments

dolleryCouncil amalgamations seldom make local governments more financially sustainable, according to research by a University of New England academic.

UNE Centre for Local Government Professor Brian Dollery says empirical evidence shows that forced amalgamations typically fail to generate financial sustainability for local councils.

“In 2004, the Carr Labor Government forcibly merged a large number of councils and in 2014 these councils have performed worse than un-amalgamated councils of the same kind”, he said.

“The best approach to local government reform is process change not structural change. State governments should be providing sensible regulatory frameworks which encourage councils to consult with their communities, engage in careful planning and reporting processes, and develop strategic plans and then monitor progress.”

Councils in New South Wales are currently being encouraged to amalgamate under the state government’s Fit for the Future package.

“Councils are being dudded in the Fit for the Future process developed by the New South Wales government.  The financial ratios and benchmark values included in the Fit for the Future criteria have been deliberately modified for the original TCorp version to make it more difficult for councils to demonstrate their financial viability.”

He also says the level of compensation being offered to merging councils by the New South Wales government isn’t enough, especially regional and rural councils.

“For example in Queensland the average metropolitan merger initially cost $9.3-million whereas regional and rural mergers cost $8-million dollars. This clearly shows that the initial costs of rural mergers are not far below the level of metropolitan councils and thus the New South Wales government should increase the amount available.”