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Thursday, 05 November 2020 09:58

The False Promise of Local Government Amalgamations

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The latest financial scandal in New South Wales concerns the disastrous attempt to merge local councils.  It has cost taxpayers a billion dollars, for little gain.

The latest financial scandal in New South Wales concerns the disastrous attempt to merge local councils.  It has cost taxpayers a billion dollars, for little gain.

 

Before the former NSW Premier Mike Baird slithered off to spend more time with his millionaire Westpac colleagues, I mean his family, and bequeathed to us all Gladys Berejiklian, he achieved a massive own goal. 

This was local government amalgamations, a stupid blunder of monumental proportions. 

As reported:

The New South Wales government has announced the creation of 19 new councils, replacing 42 existing councils. It also announced in-principle support to reduce a further 23 councils to nine, pending court challenges.

The process has been severely criticised, with anger about the limited consultation conducted by the state government, and strong opposition to larger councils in some communities.

Baird, of course, was known for blunders.  His decision to ban greyhound racing then to unban it pleased no one, and cause massive grief in turn to the greyhound industry then to animal welfare campaigners, the latter cruelly led to think the carnage routinely visited upon these unwilling canine athletes would soon end.

But the amalgamation of local councils was meant to be a signature reform for his government.  It replicated similar moves undertaken much earlier, and more brutally, in Kennett’s Victoria and Peter Beattie’s Queensland.  In the Premier State, the deed was done with a carrot rather than a stick, with financial incentives offered to councils that agreed to amalgamate.  Hundreds of millions of dollars were spent to ease the pain.

To what end?

In the wake of news that Central Coast Council (Gosford and Wyong in oldspeak) has been placed in the hands of an administrator – the unfortunately named Dick Persson – and the council sent packing, the issue has taken on fresh significance.  The Council is in debt about $90 million, and staff were told they could not be paid.

My own home town, alas.

I had the great misfortunate to have worked for the old Gosford Council briefly, before I started bagging senior council executives to their faces and we inevitably and unpleasantly parted company.  Even then, the Council was a basket case, having gone through an awful, costly and painful restructure designed by the then General Manager – in order to avoid being amalgamated with Wyong! 

A waste of time, then. 

Happily that GM, or CEO as he insisted on calling himself, thus differentiating himself from every other GM in the State, was forced to leave by the NSW Government.  Every cloud, as they say …  Unhappily for Gosford, currently undergoing a ghastly meritonisation of the downtown in the false and unevidenced  belief that high rises will make for a happy and successful town centre, that GM found his way, perhaps inevitably, to the local development industry.  Specifically, to John Singleton’s development company.  The sleazy relationship between councils and developers is another story.

But worse for the state, it has been suggested by a consulting firm that together, the amalgamated councils across New South Wales are now in debt to the tune of one billion dollars (as Dr Evil might have put it).  Quite rightly, the NSW Opposition has called for a parliamentary inquiry into this disaster. 

https://www.smh.com.au/national/nsw/labor-pushes-for-inquiry-into-doomed-council-mergers-policy-20201031-p56abx.html

After all, one of the main reasons – possibly the only one for Baird and friends – for visiting all the pain of amalgamation upon local communities was to save money!  Another scandal of gigantic proportions at the feet of the NSW Liberal Party, strangely ignored by the corporate, Gladys friendly media.

My general views on local government can be found here.

https://quadrant.org.au/opinion/qed/2019/10/the-little-platoons-of-local-government/

What is all this about?

In my former life as a regional development specialist, I would often come across debates over local government mergers.  A certain lobby which had bought holus bolus the argument of so-called “new regionalists” that governance should geographically match the supposed reality that “we now live our lives regionally”.  Whatever that means.  It was a Whitlamite fantasy, of course.  Without boring readers with the details of this arcane debate, let us just say that there is no evidence-based argument that local governments should be turned into regional governments.  We do not, in fact, “live our lives regionally”.  Regions do not have borders, and we live our lives at many geographical scales.  Locally, nationally and globally.  Seldom regionally, in fact.  Most of us don’t know what a region even is.

This was the classic argument of the proponents of regional government on the Central Coast.

When recently living in New Zealand, I had occasion to advise the then Mayor of Napier, caught in an amalgamation fight there, that the so-called arguments for amalgamation were all b.s.  He didn’t need persuading.  We won that one.  But the mergers and acquisitions, big is beautiful argument marches on.  In New Zealand, the model was Auckland Regional Council, a disaster and a power grab that cost ratepayers gazillions with no appreciable gains.  The persistence of this rubbish is incredible.  Then, when you look at “who benefits”, all becomes clear.

Businesses, especially those with a stake in development, like having fewer governments to bribe, I mean deal with.  Scratch the surface of all local government amalgamation debates and you will quickly find business lobbies leading the charge.

As Adam Smith famously said:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. 

Look at South Australian arguments for mergers, and who was putting them (in 2016):

Cutting the number of South Australian councils by about half could save individual ratepayers about $80 annually, Property Council modelling has suggested.

Ah, the ubiquitous modelling.  The Property Council of Australia has been pushing for local council amalgamations since Moses was a boy.

These things are wrapped up in highfalutin claims about “we all live regionally now”.  Let’s be honest about it.  Businesses like fewer governments to interact with.  They have been sublimely effective at getting state governments in Australia to buy into this.  State governments generally don’t like councils much.  They like to dud them.

The arguments for amalgamations tend to focus on (ironically) efficiencies.  Savings for the taxpayer.  But it never, ever works out.  Every local government amalgamation cost the taxpayer dearly.  The gains are negligible, and the losses considerable.  We all know that local councils are appalling.  Why in God’s name make them bigger, then?  The thing – the only thing – that local councils have going for them is localism.  At local scale, communities can have some sort of control over them.  When they are expanded, that one advantage is gone.  Right there.  You lose the localism and don’t gain the efficiency. 

What has also occurred is corporatisation. 

Local councils have been destroyed by having been turned into mini corporations, with CEOs and senior management structures fit for multinationals.  With corporatisation has come politically correct HR, creeping bureaucracy, management b.s., endless marketing and self-serving public relations.

Other problems are there, without doubt, in local government.  Vertical fiscal imbalance, rate pegging, unfunded mandates, for a start.  None of these problems are addressed by amalgamations.  And none of them are the fault of local councils.

So, NSW Labor Party, go for it. 

The NSW Government has (yet again) visited upon the people of New South Wales a financial disaster.  Much has been lost, in terms of community wellbeing, in the false pursuit of a chimera of financial gain through amalgamations.  People love their local councils, even if it is mostly to hate them.  Keep it local.  Leave with communities a semblance of local accountability.  Regional councils deliver nothing, other than massive debt and lost local democracy. 

I have no idea how this idea ever got traction, other than as yet another case of vested interests.

Read 149 times Last modified on Thursday, 05 November 2020 10:18
Paul Collits

Paul Collits is a freelance writer and independent researcher who lives in Lismore New South Wales.  
 
He has worked in government, industry and the university sector, and has taught at tertiary level in three different disciplines - politics, geography and planning and business studies.  He spent over 25 years working in economic development and has published widely in Australian and international peer reviewed and other journals.  He has been a keynote speaker internationally on topics such as rural development, regional policy, entrepreneurship and innovation.  Much of his academic writing is available at https://independent.academia.edu/PaulCollits
 
His recent writings on ideology, conservatism, politics, religion, culture, education and police corruption have been published in such journals as Quadrant, News Weekly and The Spectator Australia.
 
He has BA Hons and MA degrees in political science from the Australian National University and a PhD in geography and planning from the University of New England.  He currently has an adjunct Associate Professor position at a New Zealand Polytechnic.