Council mergers ‘failed to yield the benefits’

Contrary to typical arguments in favour of local government amalgamation, a new analysis says the changes did not lead to efficiencies. 

The merger of 157 Queensland councils to 73 a decade ago was touted as a win for financial sustainability and efficiencies, with proponents arguing that larger councils could capture economies of scale.

The 2008 council amalgamations was described by the then Local Government Reform Commission (LGRC) as a way to help small councils “develop and retain the skills and experience needed to… generate cost efficient and effective services.”

But a new analysis has found that those merits may not have materialised, suggesting that consolidation “failed to yield the benefits proposed by the LGRC.”

The research, which analysed measures of technical efficiencies before and after council mergers, found that two years after the mergers, amalgamated councils reported a technical efficiency score “well below” the non-amalgamated councils.

The findings suggest that many assumptions about improved efficiencies used to support the amalgamations “are not borne out by the evidence,” according to the authors Dana McQuestin and Josephy Drew of the University of Technology, Sydney and Brian Dollery of the University of New England.

“Our evidence suggests that the predicted improvements to technical efficiency for Queensland amalgamated councils may have largely failed to come to pass,” according to the findings published in the Australian Journal of Public Administration.

The projected savings predicted from the amalgamations also “largely failed to materialise,” the paper argues.

It adds:

“In the absence of such savings from staff expenditure (especially where outputs are largely non-discretionary), then improvements to technical efficiency must then largely depend on reduced operational expenditure. However, this also appears to have largely failed to materialise.”

Although the performance of both amalgamated and non-amalgamated councils increased markedly following the mergers, the paper says that the fact both achieved these efficiencies could indicate a “common cause,” such as the recovery following the global financial crisis or restructuring following the elections.

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13 thoughts on “Council mergers ‘failed to yield the benefits’

  1. Not only have amalgamations in Queensland failed to deliver financial benefits, the use of divisional voting systems has failed to deliver a regional approach to solving regional issues. Councillors can only be voted in by voters in that division- so that is where they focus. That will never deliver a regional outcome – just a lot of small council thinking rolled into a formal larger one.

    1. Ok , so how does regional thinking benifit local communities? Feet on the ground should always be better in my thinking than having officials outside the local areas controlling things. Maybe it’s the co ordination of the different councils that needs to be looked at?

      1. The theory with amalgamation is that what is good for the region is, ultimately, good for the communities there-in. That can fail the local input and community knowledge test if all the councillors in the divisions only focus of their area because they are the only ones who can re-elect them at the next election. What makes that even worse is if each of those divisional councillors has a whole-of-council portfolio – affecting the whole region- but fail to support that overall regional strategy.

  2. Our old council, Tara Shire Council, was in the black to the tune of millions of dollars, $5 mil. I believe. The amalgamation took that money away from the ratepayers into the consolidated council coffers. Not only that, but plant and machinery was sold off, and staff reduced. Our rates did not go down, rural roads in a mess. Tara still does not have a potable water supply for the town. We should secede from the Western Downs Regional Council forthwith.

    1. The same occurred with the Stanthorpe Shire Council. Funds were absorbed into the new larger regional council. Bring on de-amalgamation!

    2. Hi Tim, your experience unfortunately is typical. Catch up with the Queensland Local Government Reform Alliance website and come on board to try to address some of the chicanery which is currently going down in local government. LGAQ has a lot to answer for.

  3. Same on the Fraser Coast – Hervey Bay had $66m debt, Maryborough $17m debt, Woocoo zero debt and Tiaro minimal = $83m. Today we have a combined debt of $115m – what happened to saving ratepayer money? All the equipment similar story, same as having 23 less representatives for the same area with an increased population. 3 Mayors and 20 councillors gone. 724 less councillors for the state. Bigger is not better!

  4. Seems results fairly uniform. CEO now has more money to spend (which ups his pay) improvements will be done where most obvious and in the areas that councillors live to improve their home values. Logical. Money corrupts even supposedly honest people.

  5. The issues start at the beginning when it is never made clear what exact performance problem/s a state-wide government drive for amalgamations is trying to solve- given councils have many uncontrollable (political, cost and regulatory) elements that impact council performance. It’s always ill- defined and with that, never clear and open to politics. If amalgamations are driven from two councils seeking to merge themselves however, I.e. driven from themselves I bet that there might be genuine direction towards sustainable positive changes whatever they are- maybe delivering more/ higher outputs for higher costs (given many costs councils have zero control over costs). What we’ve seen across so many jurisdictions is the lack of up front strategic clarity and purpose- if you never know ‘what you’re trying to accomplish before you change something then you’ll never know if it worked’ – political mastery but very poor business practice.

  6. This is certainly the case here in our LGA as we have found that the loss of experience and technical expertise in the Council workforce has continued to produce substandard jobs completion and lower standards of maintenance and repairs.

    In our view from the Resident and Ratepayers Association, we have seen more contracts go out of town contractors and large companies resulting in the money leaving town and contributing to the financial and economic collapse of the City. We believe this is certainly the case with the LGAQ’s “Local Buy” which is anything but buying local.

    It would appear that Peter Beatie was grossly wrong in his calculations which have cost people millions.

  7. Big councils=big money=big temptations. No corruption in small shires, no waste, no feather bedding, no gold plating.
    Big councils = remote councils=non-consultative councils=secretive councils=non-accountable councils = non-transparent councils=councils not interested in ratepayers or their needs.

  8. Just prior to amalgamation combined debt for [name of council redacted] was $26 million. Ten years on the debt was $175 million but Council said “no big deal” just like owing $25K on $500K mortgage because we got assets of $2 billion”. But, bulk of Councils are “toxic” assets and of ornamental value only. When was the last time you heard of a Council getting cash money for sale of old bitumen roads and worn out sewerage pipes? These assets are non profit making, but require ongoing maintenance.

    Council and Staff entitlements under amalgamation have now lifted them into the “big time” and rate payers, shot on any pay rises, are footing the bill for this ill founded experiment.

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