Are merged councils financially secure?

Brian Halstead

The NSW Government has spent $360 million on grants to fund its council amalgamation program and $200 million more for communities in an aim to hide the fact that forced council mergers are financially failing.

These figures are contained in government documents on local government reform and the new $200 million ‘Stronger Communities’ payouts in country and regional NSW. We believe these grants are political sweeteners to soften an electoral backlash against the state Coalition because of forced mergers.

Following a ten-week study and research in response to savings being voiced by the Local Government Minister Gabrielle Upton and publicity issued by the state Coalition, there appear to be serious unexplained shortfalls in most amalgamated council figures.

As justification for NSW council amalgamations, the State Government promised surpluses for the first year (2017/18) of $82.3 million in metro councils and 20-year savings for regional and rural councils of $232million.

We studied seven metro and 13 regional and country amalgamated councils. In metro councils, based on the councils’ 2017/18 proposed plans, deficits are forecast in total to be $1.3 million rather than the $82.5 million surplus the government promised in its proposals. The shortfalls on a comparable basis vary from $19 million in the new Inner West Council and $17.4 million in Cumberland, with many more councils in large shortfall territory.

In the country and regions, Central Coast has a 20-year proposed savings figure of $115 million. In the council’s own 2017/18 forecast, the Central Coast has a deficit forecast of $8 million. In the 2017/18 general fund, Mid Coast Council will have a $15.4 million deficit, Queanbeyan $17.3 million, Snowy Monaro $4.4m, and Cootamundra nearly $2.5 million. The list of deficits goes on.

One of the key benefits of amalgamated councils as claimed by the Baird/Berejiklian government was the expected improved financial performance compared with the previous stand-alone pre-amalgamated councils.

The figures show the councils have failed miserably to deliver the surpluses promised by the State Government in the amalgamation proposals. The councils also fail in most cases to deliver the surpluses, that in total the individual councils committed to make standing alone or actually made three years earlier.

Unless the amalgamated councils produce reconciliations with the government proposals, the overall amalgamated proposals will be seen to be a smoke and mirrors spin process supported by a secret KPMG Report. The amalgamations clearly appear not to be delivering the financial benefits promised.

While we welcome the fact that the court proceedings in Sydney and in country and regional NSW have been withdrawn, we are still very concerned that many NSW councils are unable to deny amalgamations through legal proceedings.

The communities must be given a say on whether the amalgamations that have taken place should be reversed as they are failing to deliver.

Brian Halstead is an accountant, the author of the study and president of the Save Our Councils Coalition.

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