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Hilltops Council is one of the NSW councils facing a bill for its merger. Pic: Facebook.

 

The NSW government has left some councils with hefty bills to pay since their forced amalgamations in May last year.

Government News understands that mergers have ended up costing some NSW councils more than the state government merger and transition funding they were given.

Rural and regional councils, in particular, are resentful because they received only half of what metropolitan councils were given to cover the process and yet they often receive much less from rates and have lower reserves.

Rural and regional councils received $5 million for each merger, while metropolitan councils were handed $10 million for their mergers under the state government’s New Council Implementation Fund (NCIF).

But there were caveats. The funding could only be used for certain things, such as getting expert advice and integrating IT systems, but not to pay ongoing staff costs or council administrators, who replace councillors and mayors until the local government elections in September.

Councils were also given between $10 to $15 million of Stronger Communities funding to go towards community projects and infrastructure.

Despite the funding, some councils are finding there is a reality gap.

Hilltops Council, a merger between Boorowa, Harden and Young Councils in the South West Slopes of the state, estimates that it will end up spending $6.5 million on its merger, a shortfall of $1.5 million.

Greens MP and Local Government Spokesperson David Shoebridge said residents of the three former council areas would be ‘shaking their heads’ at the figures and wondering where the $1.5 million extra would come from.

“Every independent expert said at the start of this process that amalgamations would be more expensive and more disruptive than the government pretended, and now we are seeing this come true,” Mr Shoebridge said.

“The incompetence of the Coalition is really staggering, and now they are expecting residents in the local councils they have destroyed to meet the cost of their failure.”

Hilltops General Manager Anthony McMahon said he did not understand the logic behind giving rural and regional councils significantly less funding to cover their merger costs than their metro counterparts.

“In our case, we’ve been responsible for bringing three councils together that are geographically separated,” Mr McMahon said.

“We’re also a water utility and we have additional constraints in relation to having two former councils with populations under 5,000, which means we have to comply with Section 218CA of the Local Government Act.  These factors are not a consideration for metro councils.”

The council will finalise its transitional costs and then consider whether to lobby the state government for the money.

“We’re focused on ensuring Hilltops Council is adequately resourced to complete the merger process, and will be making representations to Minister Upton accordingly,” Mr McMahon said.

“We’ve made clear our determination in ensuring the community does not pay for merger-related costs.”

But it is not only regional councils who have been left to pick up the tab for the mergers most of them fought hard against.

Sydney’s Northern Beaches Council, an amalgam of Manly, Pittwater and Warringah Councils, received $10 million for its upfront merger costs and has only $105,000 left in the kitty.

The council’s biggest outlays were $2.5 million for staff redundancies and $2.8 million for system integration.

Northern Beaches Council acknowledges it faces further restructuring costs in the draft of its 2017-2018 Operational Plan.

“It is recognised that council will incur further restructuring costs such as the cost of integration, aligning positions within the new organisational structure and new salary system which will exceed the funding provided,” says the plan.

“Accordingly the Long Term Financial Plan has been prepared on the basis that once the NCIF has been fully utilised, existing budgets will firstly be used to pay for those merger and transition costs not funded through this mechanism prior to the identification of net savings.”

Brian Halstead President of Save Our Councils Coalition, a community group against forced council mergers, said a funding shortfall had always been on the cards.

“The amount that the government allowed was based on the KPMG report, which under costed amalgamations and because they’re not allowing councils to book the ongoing staff costs and administrators against the funding,” Mr Halstead said.

He said some council staff were spending 25 per cent of their time managing the merger process, including harmonising service delivery and staff pay and conditions, and that NSW Premier Gladys Berejiklian should stump up the extra cash.

“If I was a ratepayer, I would be thinking that these amalgamations have been forced on them by state government. It’s only reasonable that the state government bear the costs of amalgamation but I doubt any of the administrators will [ask] because they’re paid public servants.”

Local Government NSW (LGNSW) President Keith Rhoades said he was not surprised that merger costs had exceeded the funding available.

“LGNSW, along with a number of academics and other experts, argued strongly throughout the process that there was a strong potential for additional costs,” Mr Rhoades said.

“It was always clear that the cost of individual amalgamations would vary from council to council depending on readiness, systems compatibility, staff skills etc and in fact this is one reason why forced amalgamations can be more difficult than those that are achieved voluntarily, after extensive meaningful consultation.”

Roberta Ryan, Director of the Institute for Public Policy and Governance at the University of Technology Sydney, said it was hard to predict the cost of mergers but the state government had given it their best shot at trying to work it out from past experience.

She said the cost of mergers would depend partly upon the extent of co-operation between councils before they merged, for example through shared IT systems and services and the level of regulatory harmony in an area.

“I understand there has been a shortfall for a number of councils,” Ms Ryan said.

“Many regional and rural councils would have found it harder and more expensive because the amount [they were given] was less and some of them may not have been working towards some of these things that some of the metro councils were.”

The ability of new councils to absorb any cost blowout was highly variable, she said.

“Some councils have good reserves but some of the smaller ones are very strapped financially.”

Asked when the true costs and savings from mergers would be known she said: “Not ever - as we don’t have the base line data available - there can be overall benefits and improvements - that may have happened even if the amalgamations didn’t happen.”

The Department of Premier and Cabinet (DPC) would not say whether any NSW councils had approached Local Government Minister Gabrielle Upton to fund the shortfall or whether the government would act, should this occur.

The DPC statement would only say:

“The NSW Government has provided an unprecedented level of support to new local councils.

“The NSW Government provided new councils with $375 million to implement the mergers and kick start investment in new services and infrastructure for their residents.

“New councils in regional areas received $5 million to cover the costs of merging, as well as $10 million for a merger of two councils or $15 million for a merger of three councils, which is to be used for community, services and infrastructure projects.”
                    [post_title] => NSW councils fork out for forced mergers as government funding dries up
                    [post_excerpt] => Councils could petition Berejiklian for shortfall.
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                    [post_content] => 

A crowdfunding campaign to restore Pittwater Council and enable it to break away from the Northern Beaches Council reached 75 per cent of its target in a matter of days.

The campaign, led by newly-formed community group Protect Pittwater, aims to raise $10,000 through crowdfunding platform Chuffed. So far $7,125 has been raised and 58 people have donated since the campaign went live at 1pm on Tuesday this week.

Pittwater, Manly and Warringah Councils were the subject of a forced council merger and became the Northern Beaches Council in May 2016.

Ex-Pittwater councillor and retired barrister Bob Grace said the initial goal of $10,000 was enough for legal advice and a statement of claim.

“I think it’s really a super response and it shows by the number of people donating that the people out here in Pittwater want to go back, fight the government and get Pittwater back,” Mr Grace said.

“It’s really exciting, the way that people have responded. It’s unbelievable.”



 

The campaign has been partly inspired by the recent success of Ku-ring-gai Council, which won an appeal against a forced merger with part of Hornsby Shire Council after the Court of Appeal found it had been “denied procedural process” and ordered the NSW government to pay the council’s costs in March.

Woollahra Council won a victory of sorts earlier in the High Court in May when it was granted special leave to appeal its forced merger with Randwick and Waverley Councils after losing its Land and Environment Court case in December 2016.

Another local residents’ group, Local Democracy Matters, has also been formed to fight the merger and is meeting this Saturday at Bondi Pavilion.

Both groups are considering their options and legal challenges are likely but NSW Premier Gladys Berejiklian has said she will press ahead with the mergers. 
                    [post_title] => Crowdfunded council de-merger campaign starts strong
                    [post_excerpt] => Residents fight NSW government on mergers. 
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                    [post_content] => It was hard but very effective day at work

 

Council amalgamations in NSW have created a revolving door of staff as new councils struggle to hold on to their general managers.

The game of management musical chairs has gathered pace recently and many of those parachuting belatedly into the top jobs have been from NSW Premier Mike Baird’s Northern Beaches stomping ground.

Rik Hart became the latest (interim) General Manager of Sydney’s fledging Inner West Council last week after respected GM Vanessa Chan resigned.

Hart spent ten years as one of the state’s highest paid GMs during his tenure at Warringah Council before the council merged with Pittwater and Manly and he was appointed Deputy GM of the new Northern Beaches Council, which turned out to be a brief gig.

Chan’s reasons for resigning have been kept on the down-low, although she cited “personal reasons” but bringing three councils together while keeping the new council’s daily operations going and dealing with fierce public hostility to the merger would not have been an easy task. Chan was previously GM at Ashfield Council and had notched up more than 15 years working in local government.

The inner-west merger between Ashfield, Leichhardt and Marrickville Councils has already claimed the scalps of Leichhardt GM Peter Head and Marrickville’s Brian Barrett, who both quit rather than take on a deputy GM role.

A slew of other senior staff joined them in walking out the door, including Leichhardt’s Director of Corporate Services Matthew Phillips; Marrickville’s Director of Planning and Environment Tim Moore; Director of Infrastructure Services Neil Strickland and Director of Corporate Services Steve Kludass.

The freshly minted Northern Beaches Council has haemorrhaged senior staff since the merger between Pittwater, Manly and Warringah was pushed through in May.

The mass exit is unsurprising given the council was top heavy at its inception, with an administrator, interim general manager and eight deputies.

Henry Wong quit as Deputy GM and ended up as Strathfield Council’s acting GM after spending years in the same role at Manly Council.

Other senior managers dropped in from the Northern Beaches and scattered further afield include former Warringah Council Deputy General Manager Malcolm Ryan, who left for Western Sydney to take up a job as GM at Cumberland Council – an amalgam of parts of Auburn, Holroyd and Parramatta local government areas, a contract which runs until March 2018.

Deputy GM Melinda Hewitt (previously Pittwater Council’s Deputy GM) left Northern Beaches Council in August after seven years on the peninsula, as did former deputy Stephen Clements.

CEO at Local Government Professionals Australian NSW, Annalisa Haskell said some senior managers left before they lost their jobs or had to work in a new set up they did not like under a merged council.

“There are people going everywhere,” Haskell said.

She said that movement at the top was “inevitable” following council mergers, particularly because merged councils would be creating a “new order”, which may jar with established staff.

“The leadership needs to establish a new organisation and that can be challenging if you have got the incumbents there. Change is always difficult. In any organisation there is a positive and negative.”

The situation had the potential to create conflict between general managers and their deputies, most of whom had served as GMs before the mergers.

 

Businessman standing in front of revolving door, checking time on wristwatch, picking up briefcase

 

Instability at the top has also affected those councils threatened with amalgamation but who have not yet merged. Their respective general managers are well aware that their necks are on the guillotine.

Arthur Kyron left his GM post at Waverley Council in April, citing the uncertainty created by mergers as the reason for his resignation. A proposal to merge Waverley, Randwick and Woollahra is still on the table, with Woollahra resisting. One interim GM would be appointed to oversee the transition.

Cabonne Council lost General Manager Andrew Hopkins in August after four years in the job after Hopkins said he had to think of his family and career while the merger between Cabonne, Blayney and Orange was still going through the courts.

Strathfield Council is on its fifth Acting General Manager (Henry Wong) since its long-serving General Manager David Backhouse walked out the door in February. The council remains locked in a court battle resisting the government’s proposal to merge it with Canada Bay and Burwood Councils.

Local government veteran Backhouse quit Strathfield Council after 30 years, ten spent as GM. Two other senior staff quit too: Corporate Affairs Director Neale Redman and Head of Planning David Hazaldene.

But their departures may not have been solely precipitated by amalgamations.

An October 2015 Office of Local Government investigation found that Strathfield Council spent almost $900,000 on legal services and advice from International Property Group over a four-year period and concluded that it had little to show for it.

The investigation identified ‘systemic deficiencies’ and failures in administration and slapped a performance improvement order on the council.

Not even the lower north shore has proved a safe haven for general managers. The state government’s proposal to merge Mosman, North Sydney and Willoughby Councils is likely to have created a sense of unease among the people who work there.

Mosman’s GM Veronica Lee chucked in her job in August and left to become Executive Director of Corporate Service at the NSW Office of Sport. North Sydney GM Warwick Winn jumped ship for Manningham Council in suburban Melbourne in April.

President of Local Government NSW Keith Rhoades said he was aware of a great deal of movement at senior level within councils, much of it due to the uncertainty created by mergers.

“They’ve got to think about their families and their futures and their careers, if there’s a position come up that might be more secure for them. Job security is something to be treasured these days,” Rhoades said.

Haskell agreed: “When you’re in a state of unknown it’s always hard so I guess some people are changing to make active decisions about their careers. I think you would see more movement there just because of the uncertainty.”

Some managers have left councils under threat of merging for those that have already gone through the process. Haskell said: “there are opportunities coming up in merged councils for people who may be want surety.”

Lee Furness hotfooted it out of the doors as Director of Corporate Policy at Shellharbour Council (slated to merge with Wollongong) this month to become Executive Director at Hilltops Council.

Haskell said the massive personnel changes presented both opportunities and dangers.

There was a possibility the sector could lose skills and corporate memory but she said this was part of a wider trend with the retirement of baby boomers at senior level.

Another fear was that the sector could become fragmented into three: councils where there had been no change, amalgamated councils and those councils which might be merged.

“Although there were lots of little councils before it was quite cohesive,” she said. “It feels a little bit more fragmented at the moment. We have people who are not changing that are stable, groups that are waiting and people who have changed. It’s very abnormal at the moment.”

Haskell said councils were stronger when they connected and shared best practice.
                    [post_title] => Best of 2016: Musical chairs at the top for NSW local councils since mergers
                    [post_excerpt] => Northern Beaches execs go west.
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                    [post_content] =>   city-of-sydney-new-councillors


City of Sydney councillors sworn in

World champion town crier, Graham Keating, officially swore in Sydney Lord Mayor, Clover Moore and nine other councillors on Wednesday this week.

Returning councillors were: Robert Kok (Clover Moore Independent Team or CMIT), Christine Forster (Liberal), Linda Scott (Labor), Clover Moore and Angela Vithoulkas (Sydney Matters).

Five new councillors were also sworn in: Professor Kerryn Phelps (CMIT), Phillip Thallis (CMIT), Jess Scully (CMIT), Jess Miller (CMIT) and Craig Chung (Liberal).

This gives the Clover Moore Independent Team the majority on the new council, with six councillors out of ten.

 

Mosman council considering next move in merger case

Legal eagles acting for Mosman Council are poring over this week’s 127-page court judgement to decide what to do next.

Justice Tim Moore handed down his judgement in the Land and Environment Court earlier this week. In it, he identified flaws in the government-appointed delegates’ reports submitted to the Boundaries Commission, which may mean delegates need to go back and redo sections of the report.

Justice Moore concluded that there was “no proper statutory foundation” for either merger to go ahead at the current time because he said both reports contained errors. Read more here.

Mosman Council held an Extraordinary General Meeting on Wednesday during which it vowed to maintain its independence and continue to resist a merger with Willoughby and North Sydney Council.

 


Hobart Council joins No Business in Abuse campaign

Hobart City Council is the latest council to cut any links to companies with contracts in Australia’s immigration detention camps at Nauru and Manus Island.

Eight councils have signed up to the GetUp campaign so far: Augusta Margaret River, Bass Coast Shire, Byron Bay, City of Sydney, Fremantle, Marrickville and Yarra.

When they sign up to the campaign councils pledge to stop doing business with companies including Wilson Security and Ferrovial’s Broadspectrum (formerly Transfield) that have contracts in Australia’s immigration detention camps.

Hobart Council will also review any current contracts and investments it has with these companies and look into the legalities around excluding them from any future business with the council, including tenders.

 

Shortlist of public buildings revealed for the National Architecture Awards

The Australian Institute of Architects has announced the 2016 National Architecture Awards shortlist, including six in the public architecture category.  Other categories included urban design, commercial architecture and interior architecture.

The  buildings that made the cut in the public architecture category were:  City of Perth Library and Public Plaza (WA) – Kerry Hill Architects; Geelong Library and Heritage Centre (VIC) – ARM Architecture;  St Andrews House (NSW) – Candalepas Associates, Break O’Day;  Community Stadium (TAS) – Edwards and Simpson; Kempsey Crescent Head Surf Life Saving Club (NSW) – Neeson Murcutt Architects and The Condensery - Somerset Regional Art Gallery (QLD) – PHAB Architects.

You can vote online for the People’s Choice Award, which launches on World Architecture Day October 3 October at architecture.com.au/awards-2016

The winners will be announced at an evening ceremony on November 3 at the Ivy Ballroom in Sydney.

 

Northern Beaches Councils trains budding native bee keepers 

Northern Beaches Council is helping to address the shrinking population of native bees by hosting two workshops with entomologists Dr Tim Heard and Dr Tobias Smith on Sunday 16 October.

During the sessions Dr Heard and Dr Smith from Sugar Bag Bees will share their expert knowledge of native bees.

"Our workshop introduces people to the broad diversity of Australian native bees and how to work with then," said Dr Heard.

"They are very seldom seen, but essential for the health of our environment."

The workshop includes: how to encourage native bees into the garden; how to keep native stingless social bees in hives; hive management including design and protection from natural enemies and how to use them for pollination and honey production.

The workshop will be held at the Coastal Environment Centre at Lake Park Road, North Narrabeen 9am-12pm.
                    [post_title] => Around the councils: News from Australia’s local councils
                    [post_excerpt] => Mergers, bees and Clover. 
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                    [post_content] => Paul Toole anger media conference 1


 

Academics and activists have poured scorn on NSW Local Government Minister Paul Toole’s claims that newly merged councils have already saved millions since merging on May 12.

Nineteen new councils were created from 43 councils two months ago and Mr Toole said the savings were already rolling in.  State Premier Mike Baird has promised that NSW council mergers will yield $2 billion in savings over the next twenty years.

Mr Toole told the Sydney Morning Herald: “Over a two-week period in June seven of the new councils collectively saved $6.7 million through a reduction in senior executive positions and lower administration costs, such as banking … and information and communications technology” adding, “These early wins are just the start.”

Georges River Council (formerly Hurstville and Kogarah Councils) said the savings it had made since merging would fund an extra $620,000 in pensioner rate rebates.

Meanwhile, Northern Beaches Council (previously Manly, Warringah and Pittwater Councils) told residents it has already found $3 million in annual savings, mostly through insurance, worker’s compensation insurance and senior executive redundancies.

However, the minister refused to name the other five NSW councils that had made savings or how they had been made.

Caution and suspicion 

But some academics and activists are viewing Mr Toole’s claims with suspicion and warning of the consequences if councils believe the hype.

Dr Joseph Drew, Research Fellow at the Institute of Public Policy and Governance at the University of Technology Sydney, said a crucial piece of information was missing: whether the announced savings were gross or net.

Dr Drew said it was unlikely savings had yet materialised from making senior executives redundant, particularly because most executives would have been entitled to a redundancy payment.

In addition, some councils have kept on both former general managers (one as deputy general manager), at least for a while.

Government News suspects that those general managers that have kept their jobs would be reasonably expecting bigger pay packets in return for heading up larger councils and more complex operations too, pushing council costs up. It is also uncertain whether the announced savings have factored in the pay of government appointed council administrators.

Apart from the most senior roles, other staff are protected from forced redundancies for three years so these savings will not be registered for a while either.

Dr Drew said: “There would be gross savings, there’s no two ways about it, whether there are net savings is a completely different matter. It would be extremely unlikely that we could have a net saving at this point in time.”

He said that most councils had also incurred significant costs in community consultations and preparing business cases prior to the amalgamations.

Whatever the details of the savings – details of which Government News was unable to elicit from Mr Toole’s office – it seems a very early call to make.

Dr Drew said: “We won’t really know until we have four full financial years of data.”

He said councils should not go on a spending spree in anticipation of raking in millions of savings promised by the government, something he said happened in Queensland after council mergers.

“This represents danger to the financial sustainability of these councils if they start believing that that they are saving money now before they can possibly know and basing their future spending decisions on this.”

Local government expert Professor Brian Dollery from the University of New England – a council merger sceptic – agreed that Mr Toole was going off “half-cocked.”

“It’s highly imprudent of the Minister to make these claims so early in the 2016/17 financial year,” Prof Dollery said. “We’ve got to wait for the financial statements at the end of the year and that will only give us a preliminary feeling for the financial costs and benefits.

“The big costs are only going to come once staff reductions kick in and you have to factor in redundancy costs. There are also obviously IT systems, service harmonization and the like: all come with massive costs.”

Professor Dollery said merger costs occurred for up to six years after the 2008 Queensland council mergers and that staff costs rose year-on-year for newly amalgamated councils, compared with those who did not merge.

“Of course, you can pick out the savings but there are also going to be costs. You may have initial savings because you have sacked senior staff but it gets frittered away quickly.”

Save Our Councils Coalition member and Mosman councillor Tom Sherlock said he did not doubt councils had made savings and that these were welcome but he questioned the detail and whether service quality and delivery had been considered.

“They might have saved in one areas but spent in another area,” Mr Sherlock said. “I would suggest that the overall program is still significantly in deficit, considering all the costs of merging.”

Mr Sherlock said he doubted the savings reported from senior staff leaving were solid either.

“At the Northern Beaches Council for a time they had all three of the general managers plus the administrator on top. I would be very surprised if there were net savings at this point in time.”

He argued that savings made by combining IT contracts could have been made through joint organisations, rather than mergers, and that the cost of integrating IT systems across councils would end up being significant.

Mr Sherlock said that the minister was clearly keen to be seen to start delivering merger savings. He had been told that merged councils were reporting to the Department of Premier and Cabinet weekly.

“I fear that the Premier and the minister are keeping very close contact with these councils with a complete absence of any elected representatives. The state government is using local government as a tool for their own agenda.”

What Paul Toole’s Office said

Government News put a series of questions to Mr Toole’s office, including asking whether savings were gross or net, which councils had reported savings so far and in what areas of expenditure.

Questions were also asked about how savings could have been made so soon by dumping senior executives and how new councils could have achieved savings in IT, particularly when merging IT systems has been acknowledge as being one of the most expensive parts of council mergers.

Mr Toole’s office confirmed that the savings reported so far did not include state government money for merger costs or from the Stronger Communities Fund.

A spokesperson for Mr Toole offered a succinct reply to Government News’ list of questions: “Questions about the detail of savings made by new councils can be directed to the councils.”

So we did. All 19 of them. More to follow.
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NSW councils are refusing to go quietly, with many continuing to rail publicly against Premier Mike Baird’s forced merger program to axe forty councils.

Woollahra Council, in Sydney’s affluent Eastern Suburbs, is putting legal pressure on NSW Local Government Minister Paul Toole to abandon plans to merge it with Randwick and Waverley Councils or face Sydney silk Bret Walker, SC in court.

The council’s solicitors, Speed and Stracey, have written to Mr Toole arguing that he does not have the authority to force mergers onto councils under the Local Government Act.

The solicitors contested that changes made to the Act in 1999 streamlined voluntary council amalgamations - not forced mergers, provisions for which remain in the old act but are significantly more arduous - and gave him seven days to drop his plans or face a legal challenge.

Should the council succeed, it will turn up the political pain for the state government and could restart the entire merger process under a different section of the Local Government Act, dragging it on for multiple months.

Mr Toole has said he wants to see new councils in place by June this year but Woollahra’s audacious challenge is just one of the acts of council-led legal obstruction, many of them occurring in Liberal-voting heartlands, which could seriously derail his plans.

Several councils, particularly those divided up under earlier merger proposals, have submitted new plans after Warringah Council found a loophole in the Local Government Act (1993) allowing them to submit a rival plan for a Northern Beaches Council.

Warringah’s new proposal would mean it was no longer be split between a part merger with Pittwater and another with Mosman and Manly Councils as it is under an alternative merger plan.

A clutch of regional councils have taken the same path to avoid being splintered.

Jerilderie Shire Council has submitted a proposal to merge with Murrumbidgee and keep its local government area intact, rather than split between Berrigan Shire and Murrumbidgee, as the original proposal outlined.

Palerang has opted to amalgamate solely with Queanbeyan, rather than lose part of its council area to a merger with Goulburn Mulwaree as well.

Some councils have used the loophole in a bid to merge with fewer councils.

Corowa Shire also submitted an alternative proposal – the same as that recommended by the Independent Local Government Panel’s 2013 report - to merge with Urana Shire Council, rather than with Lockhart Shire too.

But it has further complicated matters for Mr Toole, who has been forced to submit new proposals - in the form of a one-page letter - for alternative mergers to fit around new proposals, such as mergers between Mosman, North Sydney and Willoughby, Dungog and Maitland and another between Boorowa and Young.

It has also meant another round of public inquiries to seek ratepayers’ feedback on the new proposals.

Rebellious councils are keeping up the pressure with a rally, Local Democracy Not Dictatorship, held at 12pm Sunday, March 13 at Hyde Park Fountain, led by Save Our Councils Coalition.
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Hilltops Council is one of the NSW councils facing a bill for its merger. Pic: Facebook.

 

The NSW government has left some councils with hefty bills to pay since their forced amalgamations in May last year.

Government News understands that mergers have ended up costing some NSW councils more than the state government merger and transition funding they were given.

Rural and regional councils, in particular, are resentful because they received only half of what metropolitan councils were given to cover the process and yet they often receive much less from rates and have lower reserves.

Rural and regional councils received $5 million for each merger, while metropolitan councils were handed $10 million for their mergers under the state government’s New Council Implementation Fund (NCIF).

But there were caveats. The funding could only be used for certain things, such as getting expert advice and integrating IT systems, but not to pay ongoing staff costs or council administrators, who replace councillors and mayors until the local government elections in September.

Councils were also given between $10 to $15 million of Stronger Communities funding to go towards community projects and infrastructure.

Despite the funding, some councils are finding there is a reality gap.

Hilltops Council, a merger between Boorowa, Harden and Young Councils in the South West Slopes of the state, estimates that it will end up spending $6.5 million on its merger, a shortfall of $1.5 million.

Greens MP and Local Government Spokesperson David Shoebridge said residents of the three former council areas would be ‘shaking their heads’ at the figures and wondering where the $1.5 million extra would come from.

“Every independent expert said at the start of this process that amalgamations would be more expensive and more disruptive than the government pretended, and now we are seeing this come true,” Mr Shoebridge said.

“The incompetence of the Coalition is really staggering, and now they are expecting residents in the local councils they have destroyed to meet the cost of their failure.”

Hilltops General Manager Anthony McMahon said he did not understand the logic behind giving rural and regional councils significantly less funding to cover their merger costs than their metro counterparts.

“In our case, we’ve been responsible for bringing three councils together that are geographically separated,” Mr McMahon said.

“We’re also a water utility and we have additional constraints in relation to having two former councils with populations under 5,000, which means we have to comply with Section 218CA of the Local Government Act.  These factors are not a consideration for metro councils.”

The council will finalise its transitional costs and then consider whether to lobby the state government for the money.

“We’re focused on ensuring Hilltops Council is adequately resourced to complete the merger process, and will be making representations to Minister Upton accordingly,” Mr McMahon said.

“We’ve made clear our determination in ensuring the community does not pay for merger-related costs.”

But it is not only regional councils who have been left to pick up the tab for the mergers most of them fought hard against.

Sydney’s Northern Beaches Council, an amalgam of Manly, Pittwater and Warringah Councils, received $10 million for its upfront merger costs and has only $105,000 left in the kitty.

The council’s biggest outlays were $2.5 million for staff redundancies and $2.8 million for system integration.

Northern Beaches Council acknowledges it faces further restructuring costs in the draft of its 2017-2018 Operational Plan.

“It is recognised that council will incur further restructuring costs such as the cost of integration, aligning positions within the new organisational structure and new salary system which will exceed the funding provided,” says the plan.

“Accordingly the Long Term Financial Plan has been prepared on the basis that once the NCIF has been fully utilised, existing budgets will firstly be used to pay for those merger and transition costs not funded through this mechanism prior to the identification of net savings.”

Brian Halstead President of Save Our Councils Coalition, a community group against forced council mergers, said a funding shortfall had always been on the cards.

“The amount that the government allowed was based on the KPMG report, which under costed amalgamations and because they’re not allowing councils to book the ongoing staff costs and administrators against the funding,” Mr Halstead said.

He said some council staff were spending 25 per cent of their time managing the merger process, including harmonising service delivery and staff pay and conditions, and that NSW Premier Gladys Berejiklian should stump up the extra cash.

“If I was a ratepayer, I would be thinking that these amalgamations have been forced on them by state government. It’s only reasonable that the state government bear the costs of amalgamation but I doubt any of the administrators will [ask] because they’re paid public servants.”

Local Government NSW (LGNSW) President Keith Rhoades said he was not surprised that merger costs had exceeded the funding available.

“LGNSW, along with a number of academics and other experts, argued strongly throughout the process that there was a strong potential for additional costs,” Mr Rhoades said.

“It was always clear that the cost of individual amalgamations would vary from council to council depending on readiness, systems compatibility, staff skills etc and in fact this is one reason why forced amalgamations can be more difficult than those that are achieved voluntarily, after extensive meaningful consultation.”

Roberta Ryan, Director of the Institute for Public Policy and Governance at the University of Technology Sydney, said it was hard to predict the cost of mergers but the state government had given it their best shot at trying to work it out from past experience.

She said the cost of mergers would depend partly upon the extent of co-operation between councils before they merged, for example through shared IT systems and services and the level of regulatory harmony in an area.

“I understand there has been a shortfall for a number of councils,” Ms Ryan said.

“Many regional and rural councils would have found it harder and more expensive because the amount [they were given] was less and some of them may not have been working towards some of these things that some of the metro councils were.”

The ability of new councils to absorb any cost blowout was highly variable, she said.

“Some councils have good reserves but some of the smaller ones are very strapped financially.”

Asked when the true costs and savings from mergers would be known she said: “Not ever - as we don’t have the base line data available - there can be overall benefits and improvements - that may have happened even if the amalgamations didn’t happen.”

The Department of Premier and Cabinet (DPC) would not say whether any NSW councils had approached Local Government Minister Gabrielle Upton to fund the shortfall or whether the government would act, should this occur.

The DPC statement would only say:

“The NSW Government has provided an unprecedented level of support to new local councils.

“The NSW Government provided new councils with $375 million to implement the mergers and kick start investment in new services and infrastructure for their residents.

“New councils in regional areas received $5 million to cover the costs of merging, as well as $10 million for a merger of two councils or $15 million for a merger of three councils, which is to be used for community, services and infrastructure projects.”
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Northern-Beaches-Council