Council merger bids record a 28-year history of repeat failures

Graham Bury details the long and painful road for local government reform since the number of Tasmanian municipal councils was cut from 46 to 29 in the 1990s

WITH another council merger failure (Council reform process scuttled, Mercury, September 24), it is now 28 years since the last reform process, when the number of councils was cut from 46 to 29. Since, most efforts to reform are case studies in how not to do it.

A good deal of evidence has accumulated for the need for further cuts in councils.

Feasibility studies have been done — KPMG’s Southeast councils feasibility study 2016 reported that there were likely to be substantial savings, about $7 million a year if the four councils involved were to amalgamate.

There followed two wellintentioned but unsuccessful voluntary bids to amalgamate involving Clarence, Sorell and Tasman councils. The least favoured option in the feasibility study of “doing nothing”, was the one to survive. Similarly a KPMG study, Tamar Valley Council feasibility study 2018, showed substantial annual savings after upfront costs with once again no action. Small councils do not like the idea of being taken over. “Amalgamations are a good idea unless it is my small council that is involved”.

What about the financial sustainability of councils, particularly small ones? In 2009 the Auditor-General found that “two thirds of Tasmanian councils were economically unsustainable”. There is no evidence to suggest councils are any better now than in 2009. Smaller councils have greater dependence on grants and subsidies. For example, the State Grants Commission annual report and annual reports of individual councils 2018-2019 showed Federal Assistance Grants, for two of the larger councils, Hobart and Launceston made up between 2 per cent and 3 per cent of their income. But with smaller councils these grants make up a more substantial part of their income with Tasman at 14 per cent and Circular Head 18 per cent.

These are untied grants. The original grants bill in 1974 states that they “should in no way be

a substitute for revenues raised by councils by long established methods such as rates and charges for services”.

Welcome as they are to the smaller councils, these FAGs have a perverse influence on the search for efficiencies in local government. They disguise the need for reform and support the fiction smaller councils are financially viable.

To find an amalgamation process that works we have to go back to the last successful one 28 years ago when council numbers were reduced.

The state government set up a local government advisory board that was given two years to inquire into the modernisation of local government. The board consulted with all councils, the elected members, staff and communities. The state government supported the inquiry throughout the process, facilitated local ownership, whilst making it clear that mergers were expected. They provided funds for transition costs and assisted with the establishment of transition committees for each merged council.

The success of achieving statewide reductions in council numbers in the 1990s, is attributed to the consultative approach, which engaged local government and communities and highlighted the importance of participative planning and community consultation.

Well, there we are. Not too difficult surely to plan a way forward from our current cumbersome and expensive local government sector.