By Jane Hammond in Perth

Most councils in Western Australia are in dire financial straights with more than half found to be financially unsustainable by an independent study commissioned by the WA Local Government Association (WALGA).

The interim findings of the eight-month Systemic Sustainability Study were released at the annual Local Government Week convention in Perth in August, attended by more than 600 delegates.

Chairman of the panel of experts appointed to undertake the study, acting vice-chancellor of Curtin University Professor Greg Craven said the findings pointed to the need for a radical overview of the way councils operated.

Addressing the convention, he said the study did not find that local government was a basket case in WA but rather pointed to the need to act quickly to turn the poor financial state of many councils around.

Professor Craven said 83 of the state’s 144 councils needed to increase their revenue base by more than 10 per cent just to get rid of their operating deficits.

In addition, an estimated $1.75 billion was needed now to redress the backlog in infrastructure maintenance managed by local government.

“Almost 14 per cent of local government’s $13 billion worth of community infrastructure is not being maintained.”

He said many councils were getting by with aging equipment in an effort to delay the costs of replacement. Equipment that should have been replaced after 30 years was being made to last 50 years.

“Until this study, financial unsustainability in Western Australia has largely been a hidden disease masked by poor quality financial information or inconsistent treatment of asset performance. As a consequence many councils may well believe their performance is adequate and they are actually doing quite well,” Prof Craven said.

“I don’t want to give the idea that finance is the only issue faced by the sector. Another enormously important one is skills shortage. The economic boom is making it harder for local governments to ensure they can deliver services. They are having trouble getting good people in competition with the private sector, particularly in areas like planning, finance, engineering and environmental health.”

Prof Craven said the panel did not believe merging two at risk local councils would improve the situation for either, at least until key systemic issues facing the industry were addressed.

He said the report outlined a number of alternative models for local government including a State and Territory model which would replicate features of Australia ’s federalism with some councils completely autonomous while others would receive large grants from the government at the expense of some of their autonomy.

Another model proposed the use of a state wide service provider for the industry which would provide services at a regional and statewide level in areas such as planning.

“The panel does not believe the present situation justifies amalgamating at risk or under performing authorities,” he said.

“Indeed there is already a growing local government experience in the country that the benefit yield from the mantra of economies of scale from amalgamations is negligible.”

Prof Craven said rejecting the need for change would only lead to the external imposition of ineffective change.

Local Government Minister John Ford told the convention he did not intend to force councils to amalgamate but said a steady stream of councillors were beating a path to his door to begin the controversial option of amalgamating with their neighbours.

He said the State Government had set aside $3 million to assist councils interested in investigating or implementing plans to amalgamate or share their services.

Mr Ford told the convention that once the structural reform had taken place he would examine options such as a proposal from the floor to have full-time elected members rather than part-time volunteers running local government.

Western Australian Local Government Association president Bill Mitchell said the study panel would spend the next three months consulting with the public and councils before producing its final report and recommendations for the future direction of Local Government in WA.

“The Association is confident that Local Government in WA will acknowledge the enormity of the report findings and make necessary decisions for the future benefit of their communities,” Cr Mitchell said.

“However we will not support forced amalgamations of councils.”