IPART declares NSW councils “unfit”, set for merger fight

The NSW Independent Pricing and Regulatory Tribunal (IPART) has today released its report into the “Fit for the Future” process, which has been the program whereby the NSW Government has been pushing for wide-scale council amalgamations across New South Wales. Despite the rhetoric, the report tells us nothing about the sustainability of local government, while giving us an insight into the state government’s amalgamation agenda. Despite the sheen of objectivity, IPART’s assessment works on the basis that local councils must be bigger, and for those councils which fail to meet the size criteria set by the government, their financial position is largely irrelevant.

The NSW government set a variety of criteria which it expected councils to meet. One of these criteria was the vague concept of “scale and capacity”, which seemed to be code for “bigger”. Today IPART, following the very much non-independent criteria set by the state government, has declared a majority of the state’s councils as “unfit” – most of those declared unfit were because they failed to meet the arbitrary “scale and capacity” criteria, which appears to have been applied to different councils of similar sizes.

The NSW government has used rhetoric that implies that there is no alternative but to merge for these councils, and that they need to do so to be sustainable. Yet most councils declared “unfit” cleared the financial criteria set down, and instead were declared “unfit” because of a big-council political agenda being pursued by the government. It is laughable to call this process “independent” when you consider how the criteria have been framed.

87 out of 139 proposals were declared “unfit” by IPART. This allowed Mike Baird to declare “60% of councils not fit for the future”. Yet when you drill down into the numbers, most of these proposals were solely rejected because those councils took a political position in opposition to the state government’s planned amalgamations. Sixty of these 87 proposals entirely met the financial criteria, but were rejected solely because of “scale and capacity”. Another eighteen were assessed as having sufficient scale and capacity, but failed due to financial reasons, and nine failed on both financial and “scale and capacity” grounds.

When you look more closely at Sydney, you can see that the concept of “fitness” doesn’t have much to do with whether a council is actually in financial trouble.

The large councils of Blacktown and Campbelltown were both declared unfit on financial criteria (despite the claims of those supporting amalgamation that larger councils will be in a better financial position). Hawkesbury Council, which covers a large geographic area on Sydney’s urban fringe but has a relatively small population, was also declared unfit on financial grounds, but is unlikely to face amalgamation because of its position. A similar council on the south-western fringe of Sydney, Wollondilly, was declared fit despite having a smaller population than many councils targetted elsewhere in Sydney.

When you read through the justifications for why 26 councils were declared unfit solely on the basis of “scale and capacity”, it is clear that IPART has no interest in the arguments presented by councils, but has solely rejected them because they don’t fit the government’s previously stated preferred option.

While IPART has focused on the independent panel’s recommendations to create super councils across Sydney, both IPART and the state government have dropped the ball on a lot of other recommendations from the panel, including improving council governance in a variety of ways.

There are some good reasons to support council mergers, and it’s legitimate to argue for much larger councils, but it’s misleading by the Baird government to present this IPART report as any justification, when it has found that most councils targetted for amalgamation are financially fit, and a number of large councils are not in good financial health.

In terms of what may come next, the Baird government is giving councils another month to fall in line before it would presumably pursue an agenda of forcing councils to amalgamate.

Randwick and Waverley councils in the eastern suburbs have agreed to amalgamate, although it would make more sense for such a council to take in either Woollahra to the north or Botany Bay to the west. The original proposal was for a “super city” covering these four councils along with the City of Sydney, but the Randwick/Waverley proposal is specifically opposed to merging with the City of Sydney.

Further west, Auburn, Burwood and Canada Bay have also agreed to merge, but this merger is only likely to be viable if it includes Strathfield, which is surrounded on three sides by the pro-merger councils.

Hornsby has expressed interest in taking over Ku-ring-gai, and Warringah has likewise sought to take over Manly and Pittwater.

Closer to the city, there has been complete opposition to council mergers in the inner west councils of Ashfield, Marrickville and Leichhardt, but they would be good targets for a potential merger, as would the St George councils and Canterbury. Fairfield and Liverpool councils, both amongst the larger councils in Sydney, were assess as not fit on scale and capacity grounds, so are presumably still under threat of merger.

Even if the state government decides to proceed with amalgamations, it’s not clear how they would do it, and whether it’s feasible. At the moment there is no majority in the Legislative Council in favour of amalgamations, although that could change, and the policy has a lot of opposition and very little popular support (admittedly with a large proportion of the population undecided or ambivalent).

I could easily imagine that the government may decide to pursue a more limited amalgamation agenda as a way to get over political opposition, and we don’t yet know what form that might take.

If we do see amalgamations, it’s plausible that the Baird government may postpone council elections, and this blog will be closely following what electoral structures the new councils will use, and analyse voting patterns in each new super-council. Stay tuned.

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About Ben Raue

Ben Raue is the founder and author of the Tally Room.If you like this post, please consider donating to support the Tally Room.