Western Australian councils have sent a blunt message to the Colin Barnett government that they are on course to dump his big ticket reform plans for metropolitan local governments after the State Budget 2014-15 pulled-up short of the amount of money needed for expensive mergers.

The Western Australian Local Government Association (WALGA) was warned that reform of metropolitan councils is set to be “derailed” unless there is a swift response by the state government to concerns over funding implementation costs.

The metropolitan local government reform process is a controversial plan that was unveiled in November 2013 that would reduce Perth’s 30 councils to 15.

But councils were dumbfounded at the government’s announcement in the Budget that they would be allocated $60 million for reform.

WALGA has claimed this figure is “at best misleading” and instead councils will have access to $5 million per year for three years and to $45 million in low interest loans.

It’s a significant shortfall compared to the $65 million to $100 million that WALGA has said will be required to implement metropolitan reform based on amalgamation costs in Queensland at $200 million, or just over $7 million per new council in 2008.

But the smaller pool of funding available to Perth councils could potentially lead to a need to put up rates or cut services to fund the reform.

Councils would rather avoid this because of the potential “widespread community disillusionment” at the government’s claims of benefits from reform.

Now the Association has accused the Barnett government’s new funding proposal as being “without basis” and a “betrayal” of the investment in time and resources by councils in the state’s reform process.

WALGA President Troy Pickard said mayors and presidents have questioned why they should continue to support the process if the state government cannot support reform with adequate funding.

In a key meeting between mayors and presidents, they voted to take to their councils the option of withdrawing participation in the process if the government decides not to revise its funding position.

“The proposed $5m per year is barely enough to fund one merger let alone the dozen or so mergers that the Local Government Minister has proposed. It would not be financially responsible for councils to proceed with the process without confirmation of adequate funding,” Mr Pickard said.

He said the funding for reform was calculated by WALGA to provide for operational costs that result from the implementation such as staff restructuring and aligning information systems, and does not incorporate new infrastructure or compensation.

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