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January 19, 2022

Upper house inquiry finds IPART ‘unfit’ for local govt review

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Local Govt NSW president Keith Rhoades. Photo Independent Local Govt
Local Govt NSW president Keith Rhoades. Photo Independent Local Govt

The NSW Government has failed to make a case for forced council amalgamations, and ‘unreliable’ criteria necessitates the withdrawal of Government claims councils are unfit, according to the findings of a parliamentary inquiry into local government.

The inquiry, headed by Paul Green MLC, tabled its 272-page report in the NSW Parliament yesterday, highlighting significant shortcomings in the Baird government’s Fit for the Future process and calling on the government to cease its plans to force council mergers.

Its findings have been welcomed by the local government sector, with Local Government NSW (LGNSW) president Cr Keith Rhoades commending its call for ‘an end to cost-shifting and long-term State Government policies and practices that undermine good financial management in councils.’

‘For years now LGNSW has called for meaningful local government reform – not pointless structural change but reform designed to overcome systemic funding model failures and create the stronger councils we all want,’ Cr Rhoades said.’

‘We have pointed out over and over again that structural change is not the answer – that there is no evidence that council mergers create downward pressure on rates, or improve services to residents and ratepayers.

‘For much more than a year now we have been urging the government to “fix the funding first” – and consistent with evidence from the chair of the government’s own review panel – if this path had been taken then the need to expend political capital by forcibly amalgamating councils against community wishes would not exist.’

Catch 22

Cr Rhoades said the Legislative Council inquiry also criticised the ‘scale and capacity’ criterion used by IPART to slur the majority of NSW councils as ‘unfit’ for the future, thereby misrepresenting their true status to the community.

‘The inquiry said the scale and capacity criterion was problematic, ill-defined and difficult to measure objectively – and yet the government and IPART selected this as the one criterion councils had to meet to be found fit,’ he said.

‘LGNSW argued vociferously that this criterion was a Catch 22 for councils, because they could only win the right to stand alone by showing scale and capacity, and they could only show scale and capacity if they agreed to amalgamate in line with the government’s preferences.

‘That criterion, now discredited, is the only reason IPART could declare the majority of NSW councils unfit, and claim NSW’s system of local government is broken.

‘Almost 92 per cent of metropolitan councils and 76 per cent of non-metropolitan councils met the IPART financial criteria overall, despite the systemic funding challenges.

That’s hardly broken despite what the government says.’

Other key inquiry recommendations welcomed by the sector included:

  • That the NSW Government commit to a policy of no forced amalgamations, unless councils could be proven to be virtually bankrupt or unable to maintain an acceptable level of service provision
  • That the State Government cease its cost-shifting practices and ensure adequate ongoing funding accompany services, assets or regulatory functions handed over to local councils
  • Council-operated water utilities remain under council control
  • That the option to form Joint Organisations – a collective arrangement designed to provide efficiencies without diminishing local democracy or identity – be open to all councils in NSW, not just those selected by the State Government. The Inquiry commended the ‘cooperative and consensus’ Hunters Hill-Ryde-Lane Cove model as providing a good basis for local council reform in metropolitan Sydney.
  • Implementation of the Independent Local Government Review Panels recommendation that the Boundaries Commission – the body which reviews proposed council amalgamations – be strengthened and made more independent before any NSW council amalgamations take place
  • That all councils have access to Fit for the Future funding incentives, irrespective of IPART’s Fit/Unfit finding
  • That local government minister Paul Toole work cooperatively with the sector to seek a reversal of an indexation freeze on federal Financial Assistance Grants.

‘We commend the inquiry for its comprehensive and balanced approach – this is a strong report, and the sector will continue to review its findings over the next few days,’ Cr Rhoades said.

‘In the interim, I would urge local government minister Paul Toole to heed the inquiry’s findings and recommendations: they highlight the clear path that can be walked collaboratively by the State Government and local councils to deliver lasting and meaningful sector reform to the people and communities of NSW.’

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