Council Mergers in NSW – Back to the Future

The Liberal Premier of NSW, Mike Baird, is advocating the merger of local councils across NSW, with a view to reducing their numbers from 152 to 112. The basic arguments put forward to justify council amalgamations are somewhat predictable, reflecting the premise that less government is better government. Council amalgamations, it is asserted, will result in improved economies of scale and improved service delivery for residents, with modelling showing that $2 billion in savings would be achieved over the next 20 years. While much is made of the fact that many local governments in NSW currently spend more than their revenues, the fact that such a saving would represent only a small proportion of aggregate council expenditure over this period goes barely acknowledged.  

To date, Premier Baird’s proposal has met stiff resistance. Anger amongst residents and councils is widespread, including affluent and lower socio-economic councils alike. There is much about the NSW Government’s proposal that is not transparent. Claims of improved financial efficiencies do not seem to stack up, and many proposed council mergers do not reflect the formal criteria put forward by the Baird Government.

The NSW Government’s heavy handed response to such resistance is all too familiar to Victorians who experienced forced municipal amalgamations during the 1990s under the Kennett Coalition Government. There, too, resistance was met with a ruthless determination not to allow local community sentiment and identity to stand in the way of municipal ‘reform’. The Victorian experience should serve as a warning to the people of NSW. There was a lot more involved in forced municipal amalgamations than imagined economies of scale in services delivery.

The Kennett Government’s policy approach was firmly founded on neo-liberal tenets - intent on maximising property investment opportunities by opening up established urban areas to massive redevelopment and densification. With this goal in mind, it set about coercively limiting the capacity of municipal government and local residents to defend their local urban environments from unwanted change. Council amalgamations set in motion a wave of urban ‘renewal’ - dramatically increased residential densities - across metropolitan Melbourne with only superficial regard for the preservation of neighbourhood character and valued community amenity, which has continued to the present day. The property development industry has had a field day. Fortunes have been made through the institutionalised vandalism of inherited urban amenity. Despite superficial claims of improved efficiencies from larger Councils, the underlying motivations were clearly political. The priorities of local constituents can be more easily suppressed within a smaller number of bigger councils.

This is part of the NSW government’s hidden agenda. Recent public statements by Sydney architect, Penelope Seidler, clearly represent the big property development interests behind the Baird Government’s push to reduce the number of councils. Arguing that the Baird government’s municipal rationalisation agenda does not go far enough, and acknowledging the ‘huge resistance to higher density” development in Sydney, Seidler explicitly cites small local government as an obstacle. Small local governments in her view, have allowed “local vested interests groups [to] get hold of these councils and there’s too much self interest in there.” For the most part, the local vested interests that Seidler refers to are simply the priorities and values of local residents and community groups. However, the objection that small local government is prone to minority group capture completely misses the point. Local government should be about local capture. Residents should be entitled to a real say in the character of the street and neighbourhood in which they live. As one academic (Allan, 2003) has stated: “The smaller the council the more control and hence responsibility citizens feel for its operations.” This is what the Baird Government and the property industry are opposed to. To facilitate their own capture of the urban development agenda, they need to undermine the existing democratic ‘capture’ by local residents that stands in their way.

Council amalgamations in Victoria ushered in a worrying sea-change in the very nature of local governance. Council amalgamations were accompanied by legislation which facilitated greater state government control over council decision making. At the same time, there was a shift from administrative to managerial values. Public servants were transformed into managers and the public into customers. And there was an accompanying shift which saw increasing local government reliance upon market values. For a period, local governments were dissolved and CEO’s installed. Local public servants were required to adopt private sector principles and practices, rendering councils less politically responsive to local aspirations and more ‘business like’.

Since the 1990s, there has been increased expert scrutiny of issues relating to council amalgamations and associated claims of beneficial scales of economy. Studies have noted widespread disillusionment with the “almost universal belief in amalgamation as a panacea for improving the operational efficiency of municipal service delivery”. Nevertheless:

…despite increasing scepticism in the broader Australian local government community, which echoes similar sentiments in American and Canadian policy circles…. Australian state government policy seems largely immune to doubt and continues to employ amalgamation. (Dollery and Fleming, 2005)

The Baird Government’s determination to push ahead with council amalgamations in the face of deep public resistance and questionable economic assumptions is a case study in the persistence of the big end of town in promoting bad ideas and democracy busting.