The QPR Blog

In 2012, the NSW government established the Independent Local Government Review Panel (Review Panel) to undertake a review, and to formulate options to improve the strength and effectiveness of local government. The Review Panel has released several discussion papers, the most recent last week, entitled Future Directions of NSW Local Government—Twenty Essential Steps.

This latest Report draws on feedback from the previous discussion papers to propose a range of options for local government reform. The Report is substantial, so I can do little more than scratch the surface in the following paragraphs. Suffice to say that the recommendations are wide-ranging, and need to be considered in the context of the full report.

The proposed future directions are presented as what The Panel views as twenty essential steps to reform:

1. Face the Challenges of Change
2. Create a Sustainable System
3. Keep the ‘Local’ in Local Government
4. Confront Financial Realities
5. Ensure Fiscal Responsibility
6. Bolster the Revenue Base
7. Tackle the Infrastructure Backlog
8. Promote Innovation, Productivity and Competitiveness
9. Advance Improvement and Accountability
10. Improve Political Leadership
11. Enhance the Status of Mayors
12. Revisit Council-Management Relations
13. Build Strong Regions
14. Reconfigure Rural Councils
15. Reshape Metropolitan Governance
16. Strengthen the Hunter, Central Coast and Illawarra
17. Establish a ‘Western Region Authority’
18. Progress the State-Local Agreement
19. Refocus Local Government NSW
20. Drive and Monitor Ongoing Reform

Amalgamations

The local media headlines immediately following the release of the Report, however, focused on one issue only—the recommendation (under item 13 above) for Queanbeyan and Palerang Councils to amalgamate. There is a much bigger picture here, however, and this is merely a recommendation of how one might strengthen Queanbeyan’s position and create a more viable regional centre. Moreover, this is only one of many amalgamations recommended in the report, and while timeframes are provided for many, there is none provided for the Queanbeyan-Palerang proposal. It may happen, but at the moment there’s no indication that it would happen before 2016 unless there was overwhelming support from within the respective communities.

Regardless, the initial focus appears to be on the Sydney metropolitan councils. There are then 52 small regional councils [population 5,000-10,000] for which the Review Panel recommends a range of reforms, including amalgamations, targeted for implementation by 2016.

County Councils

In order to encourage regional cooperation between councils, the Report also proposes the formation of new regional County Councils. These would be more multi-purpose bodies than the existing County Councils, comprising clusters of Local Government Areas (LGAs) with a strategic regional focus. The current proposal would have Yass Valley, Upper Lachlan, Goulburn-Mulwaree, Wingecarribee (a curious inclusion—this is the area around Moss Vale, Bundanoon and Bowral), Palerang and Queanbeyan LGAs in the Capital County Council. Most councils already operate within a regional cooperative, in our case the South East Regional Organisation of Councils (SEROC), so the introduction of County Councils, while they would have a broader charter than the existing cooperatives, is, to some extent, simply a more formal recognition of the value of these sorts of structures.

Financial Sustainability

Also included under the Review Panel’s terms of reference was the consideration of the financial sustainability of each LGA, as assessed by TCorp in the report it released earlier in April. This report is discussed in more detail in another Blog post.

Palerang was given a Moderate rating, with a Negative outlook. A Moderate rating indicates that a Council has an adequate capacity to meet its financial obligations in the short to medium term (being the next five years), and to manage risks to its business. A Negative outlook indicates that a council’s position is likely to weaken over the next three years.

Only 34 of 152 councils in NSW had a rating higher than Moderate, and only five councils had a Positive outlook, with 73, almost half, rated Negative. A large part of the Negative outlook for regional councils is related to the infrastructure ‘black hole’, the inadequacy of funding for the maintenance of infrastructure such as roads and bridges.

In considering the TCorp findings, the Review Panel assessed that 70 councils in NSW were ‘at risk’ with respect to ongoing financial sustainability. Palerang is not one of these councils.

Rate Rises

Another interesting point is that one of the indirect comments made by the ILGRP was that not enough councils are applying for special rate variations (significant rate increases) to address their financial position. The sense was that councils should levy rates at high enough levels to support the delivery of all essential services, although it is emphasised that rates are a tax, not a fee for service. The alternative, of course, is for the state and federal governments to increase the share of taxation revenue that finds its way to local government. This matter will no doubt receive more attention in due course.

A Challenge of Titanic Proportions

This is merely the tip of the local government reform agenda iceberg (without wanting to draw any analogies involving a steamer of dubious reputation). There are still as many questions as there are answers, and the answers that are there are still a bit rubbery.

The final report of the ILGRP is due in September 2013.