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August 9, 2022

Tweed, Kyogle fail first merger muster

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Tweed shire GM Troy Green is confident his shire won’t have to merge with neighbouring councils.

Tweed shire has welcomed the state government’s merger plan for the 152 councils across the state, despite it not meeting all of the Fit for the Future criteria.

But Tweed’ general manager Troy Green says amalgamation is not on the cards.

Only around a third of the state’s councils were found ‘fit for the future’ by the Independent Pricing and Regulatory Tribunal (IPART) merger review, including north coast councils Byron, Ballina and Lismore.

But the Tweed and neighbouring Kyogle councils both failed to meet the government’s benchmarks in the first assessment for amalgamation.

Mr Green said his council would resubmit in the next month an evaluation to support it standing alone.

‘This is no surprise to Tweed Shire Council as information in the government’s report is consistent with the information contained within Tweed’s submission to IPART,’ he said.

‘Within our submission we stated that we met the benchmarks of scale and capacity, operating efficiency, debt service ratio and own source revenue.  That was based on the data current at the time of submission, and the result was we did not meet the benchmark of Operating Performance Ratio for the General fund only.

‘Our situation has now changed, with the most recent information from Council’s 2014-2015 Financial Reports to be considered by Council on 29 October.

‘And I am pleased to say these independently audited reports indicate that in this last financial year, Tweed Shire Council does meet the Operating Performance Ration for the General Fund.’

‘We will naturally be including this new information in our response to the Government within the next 30 days.

‘In addition “Tweed the Future is Ours” is one of the largest planning projects Tweed has ever undertaken. The planned community engagement component of the project includes conversations with the community on the services Council provides and how these services are delivered.

‘Twenty five staff at Tweed have undertaken a comprehensive community engagement training program over the last two months including International Association of Public Participation (IAP2) training to ensure they are equipped with the appropriate resources for the engagement which will commence in two weeks’ time and is expected to take over twelve months to complete.

‘In their report, IPART state:

The Operating Performance Ratio is a key measure councils should be aiming to meet over time. However, this measure is influenced by depreciation, which is an accounting measure of the estimated consumption of the service potential of an entity’s asset base during a period.  It can often represent about 25% of a council’s annual operating expenses. Thus, changes to a council’s approach in estimating depreciation may have a material effect on the Operating Performance Ratio.
‘Tweed’s assets are valued at over $3 billion. The re-valuations of Tweed’s assets, which play a significant role in a number of the Fit for the Future criteria including Operating Performance ratio, have only been completed in the last fortnight and therefore this updated information was not included in Tweed’s submission which was required to be lodged by 30 June.

‘Council was of the opinion that the only truly reflective way to ensure the integrity of our long term financial plan asset assumptions was to have them independently assessed and valued.

‘This has involved over the last three months every road, footpath, bridge and storm water drainage asset being assed including visual inspections.

‘;Members of the community may have seen the asset condition assessors out and about in the Shire over that period.

‘The IPART Report included the following:

We note a number of councils are consulting with their community to determine if a lower standard of assets (such as roads) is acceptable. If so, under Office of Local Government Guidelines, councils may then maintain or renew assets to a ‘satisfactory’ condition (condition 3), rather than a ‘good’ condition (condition 2).
Mr Green said IPART’s assessment of Tweed’s submission recognised this approach ‘and their comments on our sustainability benchmark included:

The council expects to achieve operating surpluses in the longer term, following some consultation with the community. The expected improvement is based on revising service levels.

‘The IPART assessment of Tweed identified that our submission was consistent with the Independent Local Government Review Panel’s (ILGRP) option to be a stand-alone council.

‘In the report, IPART state that their analysis has not identified evidence for a better alternative to Tweed’s proposal to stand alone.

‘In response to the release of yesterday’s report Council is required to come back to the State Government within the next thirty days with what we understand to be, further details on our strategy to improve our position in achieving the infrastructure and service management criteria which we are now in a position to do given the asset revaluations are back with council.

‘Tweed is not one of the Councils that failed to meet the Scale and Capacity benchmark but our neighbouring Council Kyogle did not meet this criteria.

‘Therefore the state government has requested that Tweed along with Lismore and Richmond Valley councils provide their preference on what the merger outcomes for Kyogle should be.

‘Tweed’s response to this request will again be consistent and supportive of the ILGRP’s recommendations that Kyogle merge with either Lismore or Richmond Valley,’ Mr Green said.

Of the 152 councils, only 57 were found fit. A further round of merger talks among councils is now expected  with the government offering cash incentives for amalgamations which could save the state $2 billion.

Kyogle mayor Danielle Mulholland told media her council wants to reopen talks with neighbouring Richmond Valley and Lismore after IPART found two-thirds of the state’s councils to be financially unviable.

But further south, Clarence Valley, which already has the largest land area of any council on the northern rivers, has also been declared unfit.

Cr Mulholland said forced mergers loomed if councils did not volunteer for them.

Councils deemed unfit have been given 30 days to respond to the report’s findings and volunteer for mergers.

Merged local government areas will be eligible for up to a $10 million payment to cover the costs of amalgamation and up to $15 million for infrastructure projects.

Local government minister Paul Toole blamed the high number of unfit councils to their ‘resisting change’ and proposing rate increases to boost their performance, instead of volunteering for mergers.

Read about Lord Mayor Clover Moore’s reaction to the City of Sydney being declared unfit.

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