Forced council mergers: How the NSW government got it so wrong

Council mergers: A tale of two Premiers



NSW Premier Gladys Berejiklian’s decision on Tuesday to dump six regional council mergers and push ahead with Sydney metropolitan mergers concludes another chapter in what has been a terribly managed process.

Forcibly merging local councils was never going to be easy but former NSW Premier Mike Baird and Local Government Minister Paul Toole set in motion a sequence of events that further tarnished the public’s view of politicians, irritated councils and angered councillors, all while swallowing a huge amount of time, effort and money.

The words dog’s and breakfast spring to mind.

“It’s a well-earned epithet in this case,” says Professor Graham Sansom, who led the Independent Local Government Review Panel’s (ILGRP) inquiry into NSW local government reform in 2013.

“I think you can say with some fairness that pretty much everything they could get wrong they did get wrong,” says Prof Sansom. “The merger process has unquestionably been a disaster.”

Council mergers are not inherently right or wrong – this is the fifth round of council mergers in NSW since the 1970s – but the way the government set about selling them to the public and its dealings with councils was chaotic, inconsistent and disrespectful. Devious even.

In the meantime, other important local government reforms – like reviewing the rates system; encouraging better council co-operation around strategic planning and service delivery; and updating the Local Government Act were pushed into the background as mergers sparked all-out war.

It seemed mergers were the only game in town.

Articulating the merger message

Mike Baird’s success in pushing through the poles and wires sell-off to fund that state’s new infrastructure was partly because he went into the 2015 state election saying he was going to do it and he outlined the benefits of doing so for ordinary Australians.

Contrast this with the flimflammery surrounding council mergers: another extremely emotive policy area.

The government downplayed the subject of council mergers before the 2015 State election, vaguely indicating it would proceed with voluntary mergers and saying that it might push others.  It didn’t help that some government MPs, including Mr Toole, had signed petitions and spoken publicly against forced amalgamations in the recent past.

Prof Sansom says the government should have been upfront and honest about what it wanted to do and clearly set out the benefits and objectives of wider local government reform.

But the government’s narrow focus, in public at least, was on the savings it said mergers would deliver – $2 billion over 20 years – opening it up to furious disagreement from academics like University of New England’s Professor Brian Dollery at the Centre for Local Government.

“By just carrying on constantly about saving a few million here and a few million there I think the government shot itself in the foot because cash savings are the hardest benefit to prove. The financial evidence base was weak,” Prof Sansom says.

“And you don’t throw everything into that much turmoil for just one or two per cent savings on total government expenditure.”

Instead, other community benefits should have been stressed, such as better quality services, improved metropolitan planning, more opportunities for regional development, stronger local governance, ‘tangible things that people care about’ says Sansom.

The government could have spoken about giving councils more scope and more political clout at state and federal level, rather than bypassing them with new agencies like Urban Growth and the Greater Sydney Commission.

“The state government is doing things that local government ought to be doing,” he says.

Roberta Ryan, Professor and Director of the Institute for Public Policy and Governance and the Centre for Local Government at the University of Technology Sydney (UTS), agrees that the NSW government got hung up on the possible cost savings of mergers, without properly articulating the advantages of broader local government reforms.

“It is important that other potential reforms are explored and progressed at the same time – amalgamation is only one tool – and the NSW Inquiry outlined 60 plus other recommendations, some of which are being progress as well, so it is useful not to have the argument just focus on this one aspect,” Prof Ryan says.

She says the emphasis on savings alone did not help the government’s case.

“The evidence is that rates rise to the higher value and services levels also rise from the lower level to the higher level following amalgamation – so this further reduces the potential for cost savings,” says Prof Ryan.

“There may well be long-run efficiencies and higher capacity for local government in the long run which can be beneficial – so the evidence of cost savings needs to be considered as part of short term and longer term arguments.”

Prof Ryan says people are ‘generally 50:50’ about mergers but their perspectives can shift. People in regional and rural areas are more concerned about the negative impact of mergers, she says.

2015-2016 UTS research, Why Local Government Matters, showed resistance to mergers dropped markedly when the public interest benefits of mergers were spelt out. Providing the research to back it up and showing evidence of good process was also critical.

“In the metro areas – the government has a good story to tell – it needs to get out and run the arguments – locality by locality – giving people good processes – access to evidence of the potential benefits – and explain their rationale for undertaking these reforms,” she says.

Producing the evidence and sharing it was also necessary when selling mergers to the public.

“This evidence then becomes part of the public debate that keeps everyone informed and prevents the exchange of ignorance on both sides – the NSW government has invested substantially in gathering this evidence – but it would benefit from communicating it more to the affected communities.”

Baird et al got themselves in a pickle because the evidence for cost saving was weak and they’d made mergers all about saving money.

The NSW Government was not overly forthcoming about supplying the evidence either. The KPMG report, that it says backs up its merger case, is yet to be released in its entirety.

The government’s over-reliance on savings to make its case also led to jarring inconsistencies during the Fit for the Future process when some councils that were strong financially were forced to merge, while other strugglers were left to stand alone.

It left the government open to charges of political opportunism and deepened public cynicism with the process.

Prof Sansom says: “You’ve got to be able to explain what your strategy is and why you’re doing it and you’ve got to be consistent from one place to another. If you treat areas for no good reason differently people lose faith,” he says.

Listening to ratepayers, allaying fears

The government failed to listen to residents’ concerns or to come up with a plan to do anything about them, as well as not communicating a consistent merger message.

The UTS survey found people were most worried about loss of local representation from creating larger councils. This came up repeatedly during merger debates but the NSW government ignored it.

Instead it held hasty public hearings, sacked councillors, appointed administrators and delayed elections for newly merged councils until September 2017.

Prof Sansom says Mr Baird could have considered other ideas, such as having Community Boards at ward level – as happened after the New Zealand council mergers.

Larger, merged councils could also have had more councillors and wards, at least as a transition measure to reassure people that effective local representation would be maintained.

“There’s this obsession with reducing the number of councillors. A notion that councillors get in the way and it’s going to be better if you have fewer of them,” he says.

“The government leapt into mergers without having had that conversation about how to deal with people’s concerns about local representation.”

He says: “It’s basic human psychology. You want to try to think of ways of sweetening the pill.”

He argues that keeping councillors on during the transition period and appointing a transition manager would also have been the sensible thing to do, as happened with the 2008 Queensland mergers.

“Instead: [the government said] we’re going to issue a proclamation and everybody is going to disappear overnight. To me, it’s hard to conceive of a process more likely to get people’s backs up than that.”

An independent body and an independent process

The ILGRP recommended in its 2013 Revitalising Local Government report that the merger process should be managed by a reconstituted, independent Boundaries Commission – with no current or former state politicians or councillors sitting on it – to increase the public’s faith in the decision making process.

The Commission would also periodically review local government boundaries.

In fact, says Prof Ryan, residents should also be involved in setting boundaries around ‘communities of interest’. This can involve looking at key factors like how people access services, schools and shopping; commuting patterns and demographic projections, combined with extensive, independent community consultation.

“Otherwise the boundaries are not accepted by the community and there are political and administrative impacts for many years to come,” she says.

Prof Sansom says the Panel warned the government about taking matters into its own hands in its report.

“I’m more than happy to remind your readers that the ILGRP was very definitely of the view that the current legislation and process embodied in it was not going to do the job.”

Another key recommendation by the ILGRP was to reduce the direct involvement of the Local Government Minister in the merger process.

Local Government NSW describes the Minister as having “unfettered decision-making power” in its 2015 report, Amalgamations: To Merge or Not to Merge?

Professor Sansom agrees that there is too much power vested in one person.

“The problem with the Local Government Minister’s role in NSW is that it’s all powerful at both ends of the process.

“You can’t get anything considered without the minister’s ticking it in the first place and you can’t get anything implemented without the minister ticking it again and having the right to tinker with the recommendations made by the Boundaries Commission.

“It just means that the whole process was politicised from go to woe.”

Professor Sansom says he cannot understand why politicians would want to place themselves at the centre of such a fraught process.

“If you want to overcome the inevitable angst around amalgamations you have got to convince people from day one that you’re fair dinkum about it.

“Being transparent and honest, being serious about exploring all the options, not just picking a few arbitrary mergers here and there. Taking councils and communities into your confidence with evidence.”

The government wrote the merger proposals submitted to the Boundaries Commission and the Minister had the final say on whether mergers should or should not proceed.

Prof Ryan sums it up: “If it is seen as a process of political opportunism by governments to strengthen their own political fortunes it then becomes difficult.”

Checklist for state governments pursuing future council mergers 

  • Be clear and honest about your intentions from the start
  • Back them up with sufficient evidence and share this evidence
  • Engage closely with communities around what the benefits are to them
  • Listen to and act on residents’ concerns
  • Be consistent with your reasoning and apply it evenly and fairly
  • Build independence into the process, including drawing boundaries, engaging with communities and assessing proposals

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