Fit for the Future - Hunter’s Hill Council | City of Ryde Council | Lane Cove Council

AWKESBURY

Fit for the Future Hu n te r’s Hi l l Counci l

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Ci ty of R yde Council

Lane Cove Council

In for m a t io n p a c k on the N SW S t a te G ove rnme nt’s

PITTWATER

Fit for the Future PROGRAM for Loca l G ove r n me nt

The NSW State Government has released its ‘Fit for the Future’ program that will impact the way all NSW councils operate. The program proposes to merge 41 Sydney metropolitan councils into 18 and was created as a response to the findings PENRITH in the Independent Local Government Review Report, October 2013.

Independent Local Government Review LIVERPOOL Local In 2012, an Independent Government Review Panel was appointed to undertake a statewide review and identify options for governance models, structural arrangements and boundary changes for local government in NSW, taking into CAMDEN consideration:

• Ability to support current and future needs of the community • Ability to deliver infrastructure and services efficiently and effectively • The financial sustainability of each CAMPBELLTOWN local government area • Consideration of incentives to voluntary boundary changes.

BAULKHAM HILLS HORNSBY

KU-RING-GAI

WARRINGAH

BLACKTOWN RYDE

PARRAMATTA HOLROYD

FAIRFIELD

HUNTERS HILL AUBURN

CANADA BAY

STRATHFIELD BANKSTOWN

MANLY

WILLOUGHBY LANE COVE

LEICHHARDT

BURWOOD ASHFIELD

Review Panel’s Recommendation CANTERBURY

NORTH SYDNEY MOSMAN

SYDNEY

WOOLLAHRA

MARRICKVILLE RANDWICK

WAVERLEY

The Independent Local Government Review Panel presentedBOTANY a Report to the State BAY Government that recommends amalgamatingROCKDALE Hunter’s Hill, Lane Cove, Mosman, HURSTVILLE North Sydney, Willoughby Councils and the eastern two-thirds of Ryde’s area based on: • Projected 2031 population 365,400

KOGARAH

• Close functional interaction and economic/social links between these councils • Need for integrated planning for major centres, Sydney Harbour foreshores, etc • 3 of these councils projected to have fewer than 50,000 people in 2031.

The western third of Ryde’s area to amalgamate with Parramatta, Auburn and Holroyd Councils to the west based on: SUTHERLAND • Projected 2031 population 558,500 • Close functional interaction and economic/social links between these councils • Need for stronger unified local government to develop Parramatta as the second CBD • Parramatta’s northern boundary is very close to its CBD; relocation to M2 would facilitate planning and improve socio-economic mix and community linkages • Incorporating part of Ryde would strengthen link between Parramatta and ‘Global Sydney Corridor’ and improve scope for integrated planning around Epping station.

This pack contains information on the options available to local residents in response to reforms proposed by the nsw government Fit fo r t he Fut ure I nfor ma t i on Pa ck

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HORNSBY BAULKHAM HILLS

Characteristics of the Councils HORNSBY KU-RING-GAI WARRINGAHproposed to be merged

WARRINGA KU-RING-GAI

AM HILLS

PENRITH BLACKTOWN RYDE

RYDE

RYDE

PARRAMATTA

HUNTERS HILL

AUBURN

WILLOUGHBY

HOLROYD

LANE COVE

NORTH SYDNEYMOSMAN

LIVERPOOL

CANTERBURY

SYDNEY

Lane Cove

CANTERBURY Population (2012/13)

14,139

33,726

Projected 2031 population ROCKDALE

BOTANY 17,400 BAY

42,700

HURSTVILLE Current Councillor

Willoughby

CAMDEN

67,722

71,933

110,791*

33,800

83,800

91,700

13 3.00

29,605

RANDWICK

7

9

7

0.64

1.52

1.34

Representation

Merged Councillor Representation KOGARAH (12 Councillors)

North Sydney

Mosman WAVERLEY

CAMPBELLTOWN

Ryde*

Parramatta HURSTVILLE

ROCKDALE

BOTANY BAY

Holroyd

Auburn

KOGARAH 178,549 106,038

80,422

143,900*

257,400

131,400

121,700

13

12

15

12

10

3.25

2.18

5.38

3.19

2.42

SUTHERLAND

Average Residential Rates (pa)

$1,379

$1,131

$1,181

$513

$829

$646

$768

$674

$584

Value of Development Applications

$42M

$339M

$217M

$396M

$209M

$409M

$763M

$234M

$236M

Domestic Waste Management Charge

$416

$371

$433

$262

$439

$363

$308

$431

$ 396

Operating Expenses

$13.7M

$35.2M

$38.4M

$86.3M

$95.4M

$99.2M

$172.3M

$82.1M

$60M

SUTHERLAND

*One-third of Ryde’s population to merge with the western councils and two-thirds to merge with the eastern councils.

Current submissions to IPART

Approved SRV in last 3 years

What is the State Government offering Councils to merge?

The Fit for the Future PROGRAM Based on the recommendations of the Independent Local Government Review, the State Government announced the Fit for the Future program in late 2014. It requires all councils to use the recommendations from the Independent Local Government Review Report to address the following criteria: • Suitable scale and capacity • Financial sustainability • Efficiency • Infrastructure, services and capability.

Each Council is being asked to: • Review its situation, starting with whether the council has scale and capacity to meet the challenges ahead • Prepare a Fit for the Future submission by 30 June 2015 • Make the transition to a new structure by September 2016 or implement an improvement plan.

W

SYDNEY

MARRICKVILLE

BANKSTOWN

WOOLLAHRA

ASHFIELD 2012/13 Comparative Data from the Office of Local Government BURWOOD

KSTOWN

LEICHHARDT ASHFIELD

The Fit for the Future Proposed Amalgamations PART B

LEICHHARDT

Hunter’s Hill MARRICKVILLE

CANADA BAY

STRATHFIELD BURWOOD

The Fit for the Future Proposed Amalgamations PART A

WILLOUGHBY LANE COVE

NORTH HUNTERS HILL SYDNEY MOSM

AUBURN FAIRFIELD

CANADA BAY

STRATHFIELD

RYDE

PARRAMATTA

MANLY

Support For Councils who consider a merger The NSW Government is providing support for councils who are considering a merger will fullyfunded facilitators, subsidised funding to prepare a merger business case, and provide access to technical experts to help councils discuss the findings of the business case with their community and consider the options.

Up to $22.5 million for councils that merge Sydney councils, as well as the Central Coast and Lower Hunter can receive up to $22.5 million in direct funding if they decide to join forces with their neighbours. The money will help to get the new council underway and provide additional services and facilities the community needs.

Merging councils will also have support through the transition period, with extra funding to ensure that elected representatives are involved.

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Cu

Ap

What are the options available to OUR Councils?

1 2 3

Local Democracy And Representation

AGREE TO THE proposed merger of one mega-council made up of Hunter’s Hill, Lane Cove, Mosman, North Sydney, Willoughby and the eastern two-thirds of Ryde.

Reject the merger proposal and remain as individual councils that demonstrate strategic capacity.

The Part A proposal will see a merged council for Hunter’s Hill, Lane Cove, Mosman, North Sydney, Willoughby and the eastern two thirds of Ryde making a total population of 294,649 that is expected to reach a population of 370,130 by 2031. Part B proposal will see the western third of the Ryde area combine with Parramatta, Auburn and Holroyd local government areas and will have a total population of 398,246, which is forecasted

by ABS to reach 697,570 by 2031.

Under the proposed merger, based on a calculation of 12 Councillors, there would be a dramatic decrease in representation and reduced access to Councillors, as shown below.

RYDE = 2.18

Provide a superior alternative

WILLOUGHBY = 3.25

LANE COVE =1.52

such as a joint regional body of individual councils that strategically plan and deliver services on a regional basis.

MOSMAN = 1.34

What are the Key Issues in relation to these options?

• • • • • •

Research and evidence Local democracy and representation Organisation performance Service delivery Financial impacts Scale and capacity

HUNTER’S HILL = 0.64

NORTH SYDNEY = 3.00

Organisation Performance

RESEARCH AND EVIDENCE To ensure an informed decision on a preferred option the following consultants were engaged by City of Ryde, Hunter’s Hill and Lane Cove Councils: Morrison Low – To prepare a merger business case based on the Panel’s recommendation to amalgamate the eastern two thirds of Ryde with Hunter’s Hill, Lane Cove, Mosman, North Sydney and Willoughby. The business case will include an evaluation of the likely social, environmental, financial and governance outcomes of the proposed merger option.

SGS Economics - To investigate and prepare a business case on the benefits/non-benefits to be realised through the formation of a joint regional body for Northern Sydney that would enhance the region’s scale and capacity in undertaking sub-regional land use and infrastructure planning, community and cultural planning, economic development and tourism and joint regional advocacy.

Prof Percy Allan and Associates - To investigate and prepare documentation for input into the joint regional body business case on the benefits/disbenefits for the delivery of shared services, including the identification of possible service areas for further investigation.

Prof Brian Dollery (Centre of Local Government - University of New England) - To undertake a report titled ‘Compulsion Versus a Collaborative Regional Approach - an Empirical Analysis of Forced Amalgamation versus a Regional and Shared Services Approach.’

Copies of these reports are available on each council’s website

A study of 35 NSW councils that were merged into ten between 2000 and 2004, compared the financial ratings of the merged entities against the ratings of all NSW councils. The study

by Professor Brian Dollery found no material difference in performance between the ten merged councils and the rest of the NSW councils. In fact, the ten councils under consideration had a higher proportion of sub-standard performance than the rest of NSW councils.

In an analysis of the 2008 Queensland forced amalgamations, Drew, Kortt and Dollery (2015) found an increase in real operating expenditure in the order of 4.7% p.a. and that council rates had increased 4.9% over and above inflation. Dollery states ‘far from the earlier claims of leaner more efficient local authorities, the Queensland forced mergers actually produced more expensive local government, funded in part by higher municipal rates and fees’.

Service Delivery A benefit of larger organisations is that they can achieve economies of scale on operational activities, depending on the scalability of the activity. Dollery and others analysed the Queensland Councils’ performance three years after amalgamation and found almost 25% of all councils (thirteen councils) were now found to exhibit diseconomies of scale.

An alternative to achieve economies of scale is for councils to co-operate and share services where appropriate. Councils in Northern Sydney already participate in a variety of services which are shared. Some examples include: Aboriginal Heritage Program; Regional Asphalt Tender; Metropool Insurance and Risk Scheme; Shorelink Regional Library Support Services; Northern Sydney Internal Audit Service; Family Day Care; Emergency Management Committee; State Emergency Service; Regional Waste Disposal Tender, Regional Community Recycling Centre.

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Dollery concludes that Shared Services are superior to Merged Councils, and draws the following broad inferences in relation to shared services: • Shared services arrangements can enhance local service delivery • Some services seem to be more conducive to shared services arrangements

Based on the proposed merged entity of six Councils (Part A Proposal), preliminary analysis conducted by Morrison Low, found that the new entity does not meet the Fit for the Future financial benchmarks as detailed below: Fit for the Future Simulations of Merged Entity Fit for the Future Criteria

Current

Projected Performance 2023

P P O O P P

• Successful shared services arrangements typically include IT services, human resources and waste management

Operating Performance

• Successful shared services arrangements can vary significantly

Asset Renewal

• Barriers to shared services arrangements can be challenging to address, and

Asset Maintenance Debt Service

P O O O O P

• Barriers to shared services arrangements include: (i) loss of control, (ii) competing objectives, (ii) uncertain benefits, (iv) and increasingly complex management and administrative processes.

Real Operating Expenditure

O

P

TOTAL P

2

5

Infrastructure Backlog

Percy Allan in his paper ‘A Shared Services Centre Migration Plan for North Shore Councils’ states that there is no compelling evidence that centralising all local council activities into a single mega-council produces cost efficiencies. He states ‘If a shared services centre operated as a genuine commercial enterprise, savings of 10-20% may be possible.’

Financial IMPACTS The Fit for the Future Program identifies 7 key financial indicators to assess a Council’s Financial Sustainability.

The following provides an indication of each Council’s performance.

It should be noted that Lane Cove does not meet the Debt Service Ratio because it has no debt. The Councils that do not currently meet the criteria have the capacity to meet the indicators over time.

Real Operating Expenditure TOTAL P

2023

Debt Service

Ryde

Asset Maintenance

2023

Infrastructure Backlog

Lane Cove

Asset Renewal

2023

Own Source

Hunter’s Hill

Operating Performance

Source: Table 5.5 Current Performance, Compulsion verses a Collaborative Regional Approach, Professor Brian Dollery. April 2015. Projected Performance Morrison Low Fit for the Future - Joint Business Case Modelling Highlights of Draft Report May 2015.

Amalgamations have upfront costs which need to be recovered in the long term. The average cost of the 2008 amalgamations in Queensland was $8.1M per Council.

Modelling by the independent NSW Parliamentary Budget Office in 2015 estimated the total cost of mergers in NSW to be $445M, if all councils participated voluntarily, “significantly higher” if they did not. To offset these costs, the State Government’s assistance package amounts to $280M, with the remainder to be funded by councils.

The size of councils does not ensure financial sustainability.

In the last financial year, nine of the State’s biggest councils ran large operating deficits. Seven of these were Sydney Metropolitan Council’s including the State’s biggest, Blacktown City Council.

Scale and Capacity The Government has identified the following advantages by increasing Scale and Capacity:

Current and Projected Performance against Fit for the Future Financial Benchmarks

Fit for the Future Financial Benchmarks

Own Source

O P O O P P O

P P O2 O P P P

P P P P P O P

P P P P P O P

O P P O O P P

P1 P P1 P1 P P P

3

5

6

6

4

7

Source: Table 5.5 Current Performance, Compulsion verses a Collaborative Regional Approach, Professor Brian Dollery. April 2015. Projected Performance Morrison Low Fit for the Future - Joint Business Case Modelling Highlights of Draft Report May 2015.

1 Met with SRV. 2 Met until 2018.

• More robust revenue base and increased discretionary spending • Scope to undertake new functions and major projects • Ability to employ a wider range of skilled staff • Knowledge, creativity and innovation • Advanced skills in strategic planning and policy development • Effective regional collaboration • Credibility for more effective advocacy • Capable partner for State and Federal agencies • Resources to cope with complex and unexpected change • High quality political and managerial leadership.

The ‘Morrison Low Fit for the Future – Joint Business Case Modelling Report Highlights,’ identifies that preliminary findings indicate that the Councils of Hunter’s Hill, Lane Cove and City of Ryde may meet the Capacity criteria as outlined by the State Government.

An alternative proposal to form a Joint Organisation of neighbouring councils will further enhance the benefits of both Scale and Capacity, desired by the State Government.

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A superior alternative Joint Organisation Hunter’s Hill, the City of Ryde and Lane Cove Councils have explored an alternative proposal to form a Joint Organisation - a regional body which could include all councils proposed to merge.

It must be noted that the original recommendations from the Independent Local Government Review Panel included the option to combine as a strong Joint Regional Organisation.

However, the Fit for Future Program announced this only allowed Joint Organisations for rural/regional councils.

Investigating this regional alignment in a metropolitan setting would see the Councils not only retain their identity, voice and history, but partner in a way that will meet the State Government’s criteria of size and strategic capacity and demonstrate that the Councils in the region under this model are sustainable and Fit for the Future.

Joint Organisation Regional Strategic Planning

Intergovernmental collaboration

Regional Advocacy

Shared Services

Plan for future needs of the region - schools, transport, employment & economic development

Single point of contact and manage subregional planning process - Sydney Metro strategy

Represent and advocate for the region’s priorities

Deliver joint services on behalf of each Council to be more efficient

Benefits of this model include: • Being the one point of contact for both the State and Federal Governments • Strong participation with the State Government strategically planning for the region, with consistent urban planning, infrastructure standards and unified processes • Identifying opportunities to further reduce operational costs through joint purchase initiatives (e.g. waste) • Identifying key areas within each council’s operations where it would be more efficient for councils to have a shared services approach (e.g. payroll, legal, libraries) • Working together to lobby the State Government to enhance key priorities, align with the State Government’s capital works program, additional services and grant funding for the region.

What are Joint Organisations According TO the NSW State Government?

Joint Organisations are an exciting new opportunity to connect the ideas and priorities of Local and State Governments at the regional level to help our local communities to grow and thrive.

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.

Importantly, Joint Organisations are not about duplicating the work of councils, or replacing successful joint service delivery arrangements, or creating a fourth tier of Government.

Rather, they are about providing a means of elevating key community priorities, identified by councils through strategic planning processes, into a regional vision and core strategic priorities, and bringing people together to help make them happen.

Community

Member Councils

Joint Organisations

Community Strategic Plans Other council plans and strategies

Forum for collaboration on regional priorities

Joint Organisations need to operate in a flexible way so that they carry out functions to meet the needs of individual regions and encourage cooperation with Government to achieve key community priorities.

These functions may include: • Regional strategic planning and prioritisation • Intergovernmental collaboration • Regional advocacy.

Joint Organisation

Regional Strategic Planning

JOINT ORGANISATION CITY OF RYDE

Regional Action Plans Regional Growth Plans other State plans/strategies

Figure 1: Intergovernmental collaboration on regional priorities. Fit for the Future Joint Organisations – A roadmap for intergovernmental collaboration in NSW, September 2014.

STATE GOVERNMENT

HUNTER’S HILL

State Government, Others

LANE COVE

Intergovernmental collaboration

Regional Advocacy

Regional Service Delivery

Other

Source: Figure 3: Potential functions of Joint Organisations. Fit for the Future Joint Organisations – A roadmap for intergovernmental collaboration in NSW, September 2014.

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SUMMARY of Options for the Community

The Independent Local Government Review Panel has made it clear that Hunter’s Hill, Lane Cove and Ryde Councils need to address the scale and capacity targets set out in the Fit for the Future program. In addition to the option of supporting the State government’s proposed merger into one mega-council, the Councils have worked together to provide an alternate option that addresses the issues raised by the community.

Each Council is now seeking feedback from the community on each of the three options available to them. This will form part of the Council’s Fit for the Future response to the State Government.

OPTION 1

OPTION 2

OPTION 3

AGREE TO THE proposed merger

Reject THE merger proposal

Provide a superior alternative

OUTCOME:

OUTCOME:

OUTCOME:

One mega-council made up of Hunter’s Hill, Lane Cove, Mosman, North Sydney, Willoughby and the eastern two-thirds of Ryde.

Stand alone as individual Councils and demonstrate they meet strategic capacity set out by State Government.

Form a Joint Organisation of individual councils that strategically plan and deliver services on a regional basis.

SUMMARY:

SUMMARY:

SUMMARY:

• Meets State Government targets of scale and capacity

• Does not meet State Government targets of scale

• Reduced Councillor Representation

• May not meet State Government criteria of capacity

• Meets the State Government targets of capacity and alternate framework to achieve scalability

• Regional advocacy

• Population and Councillor representation remain

• Potential long-term savings through service consolidation • Upfront costs to merge • Some initial funding provided for Councils that merge – additional costs to be borne by Councils • Merged entities to be in place by March 2016.

• Current representation levels remain with added benefit of wider regional representation • Retains local services while providing benefits of regional collaboration at strategic level

• Retains local service delivery and existing financial sustainability • Triggers the need to demonstrate strategic capacity under the Fit for the Future framework

• Existing financial sustainability strengthened with increased shared services delivering long term savings

• May still result in mergers based on the assessment of the response by October 2015.

• Funding only initially earmarked for rural/regional Councils.

Timeline and Next Steps OCT 2013

SEPT 2014

FEB 2015

APRIL 2015

APRIL 2015

MAY 2015

JUNE 2015

OCT 2015

MARCH 2016

SEPT 2016

Final Report from the Independent Local Government Review Panel

Fit for the Future Merger Plan announced

by NSW Government

City of Ryde, Hunter’s Hill and Lane Cove Councils oppose forced amalgamations

Independent Research on Regional Business Case

IPART Appointed to review Fit for the Future Submissions

Community Meetings on Regional Proposal

Council submissions due 30 June

IPART makes recommendations to NSW Government based on submissions

Implementation based on NSW Government decision

Local Government elections based on new Councils

Hunter’s Hill Council Phone 9879 9400 www.huntershill.nsw.gov.au/fitforthefuture City of Ryde Phone 9952 8222 www.ryde.nsw.gov.au/fitforthefuture Lane Cove Council Phone 9911 3555 www.lanecove.nsw.gov.au/fitforthefuture Fit fo r t h e Fut ure I nfor ma t i on Pa ck

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