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leave us alone! local Councils
Leave us alone!
Despite negative public sentiment and exhaustive submissions detailing the potential detrimental impact of proposed Council mergers, the NSW State Government continues to forge ahead.
Lane Cove Council held an extraordinary meeting about the merger on 22 February with many community groups using the opportunity to highlight their concerns and their lack of support for the merger. Overwhelmingly, residents and Council are concerned about the proposed merger’s impact on the sense of community unique to Lane Cove. The groundswell of opposition to the proposed mergers has seen strong support at public rallies and through social media campaigns such as Save Our Councils NSW and Keep Councils Local. From Council’s perspective, it has been a frustrating process. Despite extensive work being done to highlight the efficiencies of Lane Cove Council, General Manager Craig Wrightson says that the facts are being ignored. “Lane Cove has much to lose if the forced merger does proceed. As one of the most financially viable Council’s in NSW, funds would be redistributed across the merged entity. “It threatens the future of many community groups who currently receive funding from Council, notwithstanding major projects including the Rosenthal development.” Construction on the Rosenthal development is scheduled to start at the beginning of 2017. However, if forced amalgamation proceeds, with the timeline saying that it would take effect from July 2016, it is anyone’s guess what would happen with such planned major capital works. “The biggest risk to Rosenthal is the potential merger process. We have lodged a DA, contracts are in place and it’s in the budget, so it would be hard to unwind, but there is no commitment from the Government that service levels, existing or upcoming projects are guaranteed. At the end of the day, the new entity could delay the project or pay penalties to cancel it altogether.” Councils throughout NSW were asked to submit the latest of a series of submissions to defend their positions on 28 February. Independent delegates appointed by the State Government are now reviewing each submission. Once assessed, reports from the delegates, together with comments from the Boundary Commission, will go to Paul Toole, Minister for Local Government, to make a decision on whether or not to recommend the implementation of each proposal to the Governor of NSW. Councils are expecting to hear the outcome of this process in May, with the potential for mergers to take effect by July this year. If forced amalgamation does go ahead, the proposed new entity comprising Lane Cove, Hunter’s Hill and Ryde Councils can have a maximum of 15 councillors. Based on head of population, this is likely to mean that Lane Cove may be allocated only 3 councillors to represent its interests (down from the current 9), Hunter’s Hill may have only 1 councillor (down from 7) and Ryde would have the remainder. Local Government elections to vote in the representatives is expected to occur in March 2017.
There has been significant media coverage and commentary highlighting the mistakes, inconsistencies, oversimplifications and errors behind the State Government’s modelling that has supposedly shaped the amalgamation agenda. Another sticking point has been the fact that the Minister for Local Government, Paul Toole, spoke out against mergers prior to being elected, saying that they should not be formed by State Government intervention and should only be as a result of mutual agreement. The lack of transparency around the financial imperatives driving the decision is also being seriously questioned. A report commissioned by the State Government and prepared by KPMG has analysed the cost benefit of forced mergers.
It has been widely criticised due to concerns about the accuracy of figures and the lack of information as to how projected numbers have been calculated. Analysis commissioned by Lane Cove Council through Morrison Low shows that the true costs of a merged entity forecast in the KPMG report uses incorrect assumptions, and in some instances, not all costs have been accounted for. As an example, it was discovered that redundancy calculations in establishing the new structure were based on the Federal Fair Work rates rather than the Local Government Award, which provides entitlements up to 309% greater, making KPMG’s projected savings incorrect. Mayor of Lane Cove, Councillor Deborah Hutchens says that local residents have a lot at stake. “The disruption and the opportunity cost of amalgamations to our community far outweigh any potential benefits, which have been significantly overstated in the merger proposal and KPMG report. Residents will suffer a dramatic reduction in local representation and the quality and quantity of Council services are at risk. The costs (both direct and indirect) in a merger transition will be felt for many years with significant sums wasted on aligning systems, services, payroll parities and not to mention the impact on our staff, many whose skills, experience and commitment to our communities will be lost to the industry through this unnecessary process. “Lane Cove Council is in a stronger position financially than the merged entity. In 2014/15 Council’s capital expenditure per head was $871, while Ryde’s was $223 per head and Hunter’s Hill $206 per head. The State’s biggest council Blacktown, spent $505 per head during the same period. “A merger would place our commitment to infrastructure in jeopardy as capital expenditure would be spread over the merged area, so that Lane Cove would be subsidising the other areas. “And it won’t just be infrastructure at risk. Services will also be at risk. Lane Cove has more revenue per capita ($1608) compared to Ryde ($1210) and Hunter’s Hill ($1132) which gives it the capacity to deliver a greater range and quality of services. A merger would result in a reduction of services directly for Lane Cove residents, as funds are allocated across the merged area to improve the existing levels in Ryde and Hunter’s Hill.” Mayor of Hunter’s Hill, Councillor Richard Quinn, is in agreement that the merger proposal should be rejected on the basis of the high risk of failure for it to deliver any of the proposed benefits. He believes that it would be highly detrimental to Hunter’s Hill, with strong opposition from local residents as indicated by the large turnout at their recent public meeting in late February. “The dynamics of the councils involved indicate that it is likely to mirror the Queensland experience of being costly and not delivering desired outcomes. The merger proposal is supported by a very poor business case and is a high risk – low return investment by the Government. There are alternate strategies to deliver efficiencies and streamlining that are lower cost and
lower risk than amalgamation, such as a JRA, which would deliver a better investment return.” At Lane Cove Council’s extraordinary meeting held on 22 February, Councillors were unanimous in their opposition of the proposal. “I feel frustrated and dismayed to see that the State Government is forcing this merger on us with no good reason being provided for it,” said Councillor Pam Palmer. “Lane Cove Council has been operating at a surplus for the last 10 years alongside high rates of customer satisfaction. Forced amalgamation will create a larger bureaucracy to replace a perfectly good small one. “There is nothing to demonstrate our rates will be less in a merged council. In fact, the evidence is the opposite - post merger in Queensland has seen 30% rate increases. Indeed if we are to maintain current service levels in Lane Cove, then a merger means Lane Cove ratepayers must pay more. “And what about the takeover of our assets? What compensation will we receive when these assets are transferred to the new entity?” Councillor Karola Brent said that she has been extremely disheartened by the process. “It has been a most undemocratic process to witness the unsubstantiated and completely simplistic financial analysis and assumptions. None of us feel listened to - we are unanimous in fighting the fight and seeing where it takes us. In my opinion, Lane Cove is a perfect size and the data is there to prove it.” Councillor Scott Bennison concurred that there is no supporting evidence to support forced amalgamation. “We were assured by the Coalition Government that no forced amalgamations would occur. We’re not opposed to some type of reform, however the State Government has failed to provide a business case for it. “As a Council, we haven’t just buried our head in the sand. We engaged the services of professionals who have experience with advising local governments around Australia in instances where State Governments have forced amalgamation in order to achieve their political outcomes. They came back and said forced mergers do not work – Queensland is an example of this and it is now costing tens of millions of dollars for them to de-amalgamate.” Financial modelling undertaken by Morrison Low also highlighted the gross overstatement of potential financial benefits by the State Government, which suggests a $61 million net benefit over 20 years. The Morrison Low modelling shows only $19.4 million in financial savings over the next 8 years (by 2024). “The KPMG report uses figures over a 20 year period to inflate the benefits. It isn’t possible to accurately forecast financials over a 20 year period - no government authority in Australia has budget forecasts 20 years into the future,” says Craig Wrightson. “Regardless of which consultant’s estimates are used, the savings are relatively low. They represent a dividend in dollars per capita/per year of $13.66
Many residents attended a public meeting convened by Hunter's Hill Council.
($19.33 if the Government’s estimate is utilised), which does not justify the risk and effort.”
The Lane Cove community has been active in its support of Council with their submissions to oppose the forced merger. Public sentiment seen in Council meetings, at rallies and through polling has shown opposition from the majority of residents (73% according to the most recent survey undertaken by Council in February 2016). Council’s Craig Wrightson, says that there is still a glimmer of hope that the merger will not take place. As the latest submissions are reviewed before recommendations are handed down, it’s now a waiting game to see the outcome.
The question is whether the State Government has already made up its mind, despite what the independent assessments may otherwise recommend.
Another award winning property manager joins the team at LJ Hooker Lane Cove. Welcome Grace El-Melky
