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The state government's plans to create larger councils through its "Fit for the Future" amalgamation program is headed for a parliamentary inquiry which could delay or even derail the ambitious plans to merge councils by the end of the year.
NSW councils have until June 30 to lodge their submissions with Independent Pricing and Regulatory Tribunal which will assess them. It will decide whether the councils are "fit" or "unfit" either as merged groups or as solo councils and had hoped to report by October 16.
Fairfax publications asked mayors and council general managers on the Mid-North Coast. Here are their answers:
PORT MACQUARIE-HASTINGS COUNCIL
In the financial year of 2013/14, the Australian Bureau of Statistics reported the total taxation revenue in Australia was collected in the following proportions: Federal Government 80.8%, State Government 15.8% and Local Government 3.4%. This gives little ability for Councils to absorb the costs transferred to it by the Federal or State Governments.
The easiest way for our Council to be deemed “Fit for the Future” and to meet all financial ratios set by the state, is for the cost-shifting of responsibilities to be removed. This is an issue for Local Government across NSW, identified for our Council in 2013/14 alone, as costing $8 million. Whilst this is the preferred approach from Council, it is unlikely that this proposal will be accepted by the state government.
The incentives for being deemed “fit” have been said to include access to cheaper loan facilities and streamlined grant processes. Disincentives for being deemed “not fit” include the possibility of having to merge with neighbouring Councils or other punitive action by the state compelling Councils to meet the set target ratios.
Port Macquarie-Hastings Council will consider a submission to be deemed “fit” at this month’s Council Meeting, which will likely include yearly rate rise calculations as a means of meeting the reporting obligations set by the NSW Government. These calculations do not mean that these rate rises will occur as identified, for a number of important reasons:
- The submission does not include any consideration for the community’s capacity to pay;
- The community has not been consulted regarding future rate increases or alternate service level reductions to meet the ratios;
- There is no consideration for Federal or State Government funding support, nor any proceeds from realising asset sales.
The bottom line is that whilst Councils final submission is likely to meet the criteria for being deemed “fit”, it may bear little resemblance to what is put to the community for consideration at a later date.
Another crucial change being implemented by the NSW Government is a new level of governance and politics identified as a “Joint Organisation” (JO).
Most Australians would agree that we have too many levels of government and do not need another. The NSW Government seemed determined to head in the opposite direction.
As a result of the new reforms, all Councils will be forced to join a JO and participate on a new board. Regional Organisations are notoriously political, with each representative rightly pushing for the areas they were elected to represent. How this is going to work is yet to be seen.
Cr PETER BESSELING, Port Macquarie-Hastings Council mayor
KEMPSEY SHIRE COUNCIL
It is impossible for Kempsey Shire Council to meet the Fit for Future criteria. The only way to meet some targets it not to meet other targets, they are mutually exclusive. But the bigger problem is that this process is not looking at the two main issues.
Firstly, there is not enough going into the pie. The funds we have cannot do the job, which both TCorp and the Independent Panel identified. This means we have to fix that problem. The economy today is vastly different from when local government rating systems were developed when communities were a lot less interconnected. Most product was used nearby. Now most product goes across the state and some around the world.
So we need a new system of financing basic needs that reflects today’s modern interconnected economy, not the old council by council approach. Relying on the market to pay farmers a premium for the cost of infrastructure in sparse areas is not working.
Keeping the current funding model will only continue the trend of increasing the cost of living in rural areas and reducing their ability to compete for value adding to agriculture and other industry, such as manufacturing. Because of the cost of providing basic services, rural communities often have to forgo other services that are integral to creating a good place to live. That creates disadvantage.
The second issue is that there is a lot of value in looking at how we could provide services. Different approaches to providing services is the greatest benefits that could be provided to our communities. Amalgamating government bodies together will not achieve that. The data from the past shows that amalgamations are a good way to increase rates and staff numbers, so it does provide more, but it is not more efficient. Instead we need a review into how best to provide services across the state that communities want.
Focusing all the resources on amalgamations has created an environment of fear and mistrust in local government. Without a good working relationship and trust in place innovation will be limited to pockets of councils that push on regardless. There is great potential to do better and we need support in finding those improvements by the current Fit for Future program.
DAVID RAWLINGS, Kempsey Shire Council general manager
Kempsey Shire Council has been working on becoming sustainable since 2012, well before the Fit for Future was developed. The reality is that it has taken a lot longer than five years for the council to get here and will take more than five years to fix the problem, unless you want to rapidly raise rates, which we don’t.
The Fit for Future process is supposed to deliver a platform for real positive reform in how councils meet the local needs of their communities. So far it has not really looked at or addressed the fundamental issues that are affecting communities. It needs to be a model that will provide equitable and effective services to communities across the state. Research has shown that a simple “bigger is better” approach is not necessarily the answer and has failed in the past.
While rural areas cannot competitively provide basic services they will struggle to compete to get the industry moving out of the large centres and into areas where people and employment are needed. The Fit for Future process is not going to delivery this. For the regional areas this should be one of the outcomes of this process and how government should be set up to build our communities.
Coming from a business background I am constantly amazed at how this process of reform is being undertaken. I am used to working in the travel industry, where there is a strong industry core that rapidly and professionally works out what the issues are to provide solutions. Where everyone is on the same side and working together. Solutions are rolled out across industry quickly, need to be well messaged defining understanding of the problem and the benefits from putting a solution in place.
Private business cannot afford to wait a long time to consider things and they cannot afford to get things wrong very often. It is smarter to invest money into getting the answers right and getting those answers quickly. As government we need to adopt a similar approach. We need to get the right people, with the right skills to find out what we need to do to fix the problem and then get working on doing it.
Cr LIZ CAMPBELL, Kempsey Shire Council mayor
GREAT LAKES COUNCIL
I welcome the opportunity to pass on to you what people are saying to me and concerns that they have about Council's future.
You would know from the General Manager's comments that the State Government's Independent Panel and other audits have looked favourably on our financial position and we are sustainable for the foreseeable future.
Council has achieved this by focusing on our core infrastructure; roads and bridges. In our community meetings that are held every six months, people often comment on this.
We have got to this position through a lot of hard work and soul searching. Council has had to look at everything we do and unfortunately some services we had to leave and we are unable to support other worthwhile activities.
It was therefore of some concern when the Government Review Panel recommended that Gloucester Council should explore a merger with Great Lakes.
However, rather than ignore the situation, we in conjunction with Gloucester actively and openly explored the implications and consequences of a merger. As stated by the General Manager, the merger business case is not viable for either Council.
When we took this proposal to the public, the overwhelming majority of people were not supportive of a proposal that would put Council in a worse financial position.
I support this view. Council has worked very hard to get to our current position and we should not jeopardise this.
Council does not do all of this alone. We work closely with many state government agencies to deliver projects and we are an active member of the Hunter Councils Group. This group advocate for services in the Hunter and is well regarded by the State Government.
With the community's support, we will continue to deliver and improve our services and look forward to working with you in the future.
Cr JAN McWILLIAMS, Great Lakes Council mayor
The NSW Government's reform process for local Government has a number of implications for Great Lakes Council.
The background documents that drive the current thinking are a financial sustainability audit undertaken by NSW Treasury; an infrastructure (mainly roads and bridges) audit undertaken by Consultants on behalf of the NSW Government and a report by an Independent Panel established to make specific recommendations on the future of Local Government.
Great Lakes Council fared favourability in regard to the "financial sustainability" and "infrastructure" audits and is seen as a well-run and managed Council.
The Independent Panel picked up on these findings and classed Great Lakes as a Council that "Appears likely to be sustainable in their current form for several decades".
The Independent Review Panels report recommended that Gloucester Shire Council consider merging with either Great Lakes or Greater Taree City Council.
Following this recommendation, Council in conjunction with Gloucester, prepared a "merger business case" to examine the impacts and consequences of a merger.
The independent report found that a merger would financially disadvantage both Councils with a particularly significant financial impact on Great Lakes. Given this, both Councils consider a merger is not viable at this stage.
Council therefore will submit a "Fit for the Future" submission that provides for Great Lakes to stand alone. To achieve this Council must meet certain designated financial benchmarks. Council currently meets four out of the seven designated criteria and with a modest 3% rate rise would over time meet all seven criteria.
Council has worked very hard to be in this position where we are and indeed regarded by the State as being financially sound and we will continue to work with our community to remain so.
GLENN HANDFORD, Great Lakes Council general manager
BELLINGEN SHIRE COUNCIL
There is no doubt that reform of the local government sector is important and necessary to address the long term challenges faced by all local government authorities In NSW such as financial sustainability and the asset backlog.
The reform process, now known as Fit for the Future has as its background 30 years of rate pegging (meaning councils across the state have been limited in their ability to provide works and services and large asset backlogs) as well as cost shifting (where councils are required by other levels of government to provide works or services without commensurate funding).
For Bellingen cost shifting alone represents an impost of around $1 million per year.
Each council has been asked to assess their current position against criteria which was finalised by IPART (who have been appointed by the NSW government as an independent expert assessment panel) on 5 June 2015 for submission by 30 June 2015.
The criteria, which are to be measured against a series of ratios, are as follows:
- financial sustainability
- effective infrastructure and service management
- efficiency.
The information originally released by the NSW government and now finalised by IPART has indicated that councils should use the recommendations made by the Independent Local Government Review Panel as a starting point.
Bellingen Shire Council has not been recommended for amalgamation or boundary adjustment by the Independent Local Government Review Panel.
The Panel has recommended that Bellingen Shire Council become a member of the North Coast Joint Organisation along with our neighbouring councils of Clarence Valley, Coffs Harbour and Nambucca.
Within this context Bellingen Shire Council has considered a number of reports regarding the Fit for the Future process and the implications for Council and its community.
In addition council has had a series of discussions with the other councils slated for the North Coast Joint Organisation (who have a long history of cooperation) made a submission to be a pilot which unfortunately was not successful, and is also working on resource sharing opportunities with neighbouring Councils with the objective of increased efficiencies and reduced costs.
Now that the final guidelines have been released council is in a position to finalise a submission to IPART for consideration post 30 June 2015. This will take into consideration the advice in the final guidelines wherein IPART has indicated it will be taking a holistic approach to assessing whether councils are Fit for the Future advised there is no one size fits all measure or population size in assessing a council’s scale clarified that there is no overall pass or fail mark for the criteria of sustainability effectiveness and efficiency.
The various information from government has indicated that councils need to have a sound and credible plan to improve their particular circumstances. Council’s submission will be a detailed plan to build and improve on the significant productivity improvements and efficiencies we have already made in recent years in the areas of structure and form, governance, procurement, asset management, productivity, improved work practices and service delivery, as well as work health and safety.
It will also highlight to IPART some key disadvantage factors faced by our council and our community including the fact that 57 per cent of our Shire is not rateable. The non rateable land is owned by State and Federal governments.
Our population density per square kilometre is 8, compared to 8.7 for Kempsey, 13 for Nambucca and 60 for Coffs Harbour, whilst our length of local roads per head of population is 415 compared to 363 for Kempsey, 345 for Nambucca and 108 for Coffs Harbour. We maintain 1.8 km of timber bridges which represents the fourth highest in the state.
Statistics such as these are a sharp reminder of the particular challenges faced by Bellingen in the Fit for the Future reform process and will be a key inclusion in Council’s submission.
Cr MARK TROY and LIZ JEREMY, mayor and general manager respectively.
GREATER TAREE CITY COUNCIL
THE $5 million NSW government sweetener on offer to Greater Taree City Council, Great Lakes Council and Gloucester Shire Council should two of them choose merge "is not enough" and any merger "will hurt services and the community".
That is the view of Greater Taree City Council mayor Paul Hogan and it comes as council staff work to the June 30 deadline to submit a proposal to the NSW government on how it "intends to become fit for the future".
Currently, Fit for the Future is described by the NSW government as a "blueprint for change" and "outlines what the State will do to cut red tape, invest in reform and help councils work smarter together". A reduction in the number of councils is flagged by the NSW government as an outcome.
Council's general manager, Ron Posselt says the "Fit for the Future process has recommended that Gloucester Shire Council merge with either Great Lakes Council or Greater Taree City Council."
"Great Lakes and Gloucester engaged a consultant to model the merged council and have both concluded a merger is not viable at this stage," Mr Posselt explained.
"As a more sustainable council, Great Lakes is a preferred partner for Gloucester over Greater Taree. Greater Taree will be submitting a response to Fit for the Future by 30 June as a stand alone council.
"We don't have a position of forced amalgamation of councils although we note that the peak body for councils, LGNSW has a position of no forced amalgamations," he added.
Last week in NSW Parliament, Independent member for Sydney, Alex Greenwich put a motion to the Legislative Assembly that exposed the possibility that local government councils may be forced to amalgamate.
The revelation came from the minister for local government, Paul Toole on May 14 during debate of the motion, "That this House opposes forced amalgamations of councils that are financially sustainable and have the support of their communities."
Mr Toole stated the "government does not support the motion of the member for Sydney" and outlined the government's agenda in relation to local government reform.
Speaking in the legislative assembly chamber, Mr Toole said 'NSW has 152 councils. They range in size from six square kilometres to 53,000 kilometres. They range in population from 1200 to 300,000 people."
In relation to regional communities, Mr Toole said they "...play a major role in supporting the State's economy. They put food on our table and sustain major export industries. They also play a crucial role in education, retail, resources, manufacturing and defence. For NSW to have a strong future our regional communities must also be strong."
He revealed that "councils are losing up to $1 million per day, which is not sustainable" and said "clearly, it is not an option to make no change. The government is providing, and will continue to provide councils and communities with support and funding to make the changes needed."
Cr Hogan contends that "income is the biggest issue for council and it is deliberately ignored at a State government level."
"As an elected representative you want to see what is best for your community, and amalgamation for me, will not improve anything. It will not help our community, it will not improve the financial problem of infrastructure - that will not go away."
Cr Hogan believes the NSW government offer of $5 million to assist two councils to merge "is not enough".
"There may be redundancies that have to be paid out, infrastructure changes, such as making a depot larger - the money is easily spent," he said. "I have never actually been involved in an amalgamation, only viewed what happened in Queensland and discussed it with people who were involved, and the word was that the money was not enough. I can't see it working."
RON POSSELT and Cr PAUL HOGAN, general manager and mayor respectively
Council's don't support forced amalgamations
By AINSLEE DENNIS, Manning River Times
THE NSW government has "finally tipped its hand" with its decision to not support a motion in parliament against the forced amalgamations of local government councils, according to Local Government NSW.
President Keith Rhoades AFSM described the debate in the legislative assembly as "crunch time".
"It really does suggest that the whole Fit for the Future process is simply tick-a-box, with the government firmly committed to diluting local democratic representation for purely ideological reasons," Mr Rhoades said.
"It was instructive to see the arguments trotted out against the motion, which included claims that amalgamations would 'drive down rates', that 'bigger is better', and that forced amalgamation is 'a dead-set non-issue' for our communities."
"It was also interesting how often speakers against the motion adopted a straw man argument, suggesting that the local government sector was opposed to any kind of reform.
"I can assure the community and the government this is not the case. Local government welcomes reform that genuinely improves outcomes for residents and ratepayers.
"What the sector does not support is amalgamations being forced on councils who are able to show they are financially sustainable, and whose communities have stated clearly that they wish to continue to have grass roots representation via stand alone councils."
Mr Rhoades revealed that the parliamentarians who spoke against forced amalgamations during the debate included Guy Zangari (Fairfield, Labor), Jamie Parker (Balmain, Green), Greg Piper (Lake Macquarie, Independent), Jodie Harrison (Charlestown, Labor), and Jenny Leong (Newtown, Green). He added that government parliamentarians who spoke against the motion, supporting forced amalgamations, included Geoff Lee (Parramatta, Liberal), Gareth Ward (Kiama, Liberal), John Sidoti (Drummoyne, Liberal) and Ray Williams (Castle Hill, Liberal).
The member for Myall Lakes, Stephen Bromhead did not take part in the debate.