Fit for the future: $2 billion community windfall by merging unfit councils

Published 20th October, 2015

Almost two-thirds of NSW councils are not fit for the future, according to a new report by the Independent Pricing and Regulatory Tribunal (IPART) released today by NSW Premier Mike Baird and Local Government Minister Paul Toole.

The IPART report found reducing waste and red tape through local government mergers could free up close to $2 billion over the next 20 years for NSW ratepayers, which could stabilise council rates and fund better services and new infrastructure for communities.

The NSW Government today also announced a new  Stronger Communities Fund, providing each new council up to $15 million  to invest in community infrastructure projects such as sporting fields, libraries, and parks and funding of up to $10 million for each new council to ensure ratepayers do not pay for the up-front costs of merging. This funding will be available to those mergers agreed to by councils and the NSW Government.

“Four years of independent research, analysis and NSW Government consultation with councils and the community has shown that the current system of local government is not working as well as it should be,” Mr Baird said.

“With 60 per cent of councils not fit for the future, this IPART report shows the situation is now critical and that action is needed to ensure ratepayers get value for money and the services and infrastructure they deserve.

“For many councils this is a final opportunity to do the right thing for the future of their communities, which in many cases may include merging with neighbouring councils.”

The NSW Government will now give councils a 30-day consultation opportunity to inform the Government’s position on local government reform and respond to these IPART findings.

IPART found that:

  • 71 per cent of councils in metropolitan Sydney are 'not fit', primarily because councils did not propose a merger despite clear benefits; and
  • 56 per cent of councils in regional NSW are 'not fit', due to not proposing a merger despite clear benefits, ongoing deficits or both. 

Mr Toole said that despite numerous council-commissioned business cases showing these benefits, most councils had resisted change and many councils had proposed rate increases to improve their financial performance. Thirty two councils proposed a rate rise to get fit, with 15 councils proposing rises above 30%.

“I urge councils to consider these IPART findings for their council and hold discussions with neighbouring councils and the NSW Government so they can deliver better value for money for ratepayers now and into the future," Mr Toole said.

“The $2 billion in savings and Stronger Communities Fund will enable each council to make a decision on whether to invest their extra funds into better services, more infrastructure or lower rates for their community.

“Under this plan, waste and red tape will be reduced and local representation will be maintained.”

Eight Far West NSW councils were not included in the IPART review as their unique challenges are being addressed through the Far West Initiative.

The IPART report can be found here: ipart.nsw.gov.au  

Published 20th October, 2015