Forced Mergers & Cost-shifting

Forced Amalgamations created a Sea of Red Ink

Finance professional and accountant and Brian Halstead compared the savings that the NSW Government claimed would result from the forced mergers with what actually happened. As shown in the table, for Armidale Regional, the prediction was a saving of $700,000 a year. But the reality was a deficit of $3.804 million (4th column of the table) compared to what the NSW Government's claimed savings, despite a $15 million grant to pay for the merger.

This pattern was repeated for all non-metropolitan councils. The total saving from the forced mergers was predicted to be $16.4 million per year, but instead they ended up with deficits of $48 million.

The NSW Government has a moral obligation to mitigate the impacts of the increased costs it imposed on local communities. Another expert analysis of the forced mergers (details below) also concluded that they imposed substantial costs and discusses possible ways to make amends, including de-amalgamation, or for the NSW Government to “consider new additional grant funding specifically designed to compensate communities for the … effect of amalgamation, in line with the empirical evidence we have presented in this paper.”

A second expert peer-reviewed article, written by Drew, McQuestin and Dollery, was published in the Aust J of Public Administration in 2021. The researchers’ graph compared expenditure before 44 local authorities were coerced into amalgamation with what actually happened after amalgamation (solid lines) with what would have been expected without the forced mergers. This represents strong evidence of the big increase in costs after amalgamation.

Drew’s article also recommends mandatory reviews of consultants’ work relied upon for public policymaking, because it “might encourage consulting firms to base future work on a stronger evidential foundation and to be more temperate with respect to their assumptions. Indeed, reviews of this kind might provide affected communities with a sound basis for seeking remedies for costs incurred where negligence can also be shown.”

Cost-shifting - an ever-increasing burden on local councils & ratepayers

Cost shifting - making local councils provide and pay for services previously provided by the NSW or federal governments - is an increasingly important issue. The latest cost shifting report produced by independent consultants Morrison Low on behalf of LGNSW for the 2021/2022 financial year (www.lgnsw.org.au/costshifting) shows that $1.36 billion of expense has been passed on to councils and therefore to ratepayers. This is an increase of $540 million for NSW councils and their ratepayers since the last report from the 2017/2018 financial year.

Page updated

Google Sites

Report abuse