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Proposed amalgamation of Ashfield, Leichhardt Municipal and Marrickville councils


Ashfield, Leichhardt and Marrickville councils were all found by IPART to be financially strong and sustainable as stand-alone councils. Despite their financial strength and strong community support they have been slated for amalgamation due to the government’s ill-defined and discretionary criteria of "scale and capacity".

The government claims a total financial benefit from the merger of $113 million over a 20 year period. This includes a $25 million grant from the NSW government, which artificially inflates the so-called benefit and is paid for by the taxpayer. The alleged ‘saving’ component is $88 million and as indicated is mainly proposed to be achieved through job cuts to council staff.

The government has chosen to release only selected extracts and a high level summary from the study undertaken by its consultants, KPMG to support these alleged savings. It is impossible for the community to make a full submission on the government's financial case for amalgamation without having access to the complete study for each and every council. What is apparent from the publicly information about the KPMG study is that it:

+ inflates any potential savings from future contracting arrangements in amalgamated councils, especially given the councils already enter into many contracts through Regional Organisation of Council contract tenders when there are identifiable economies of scale from doing so

+ assumes large staff losses in the merged council that will inevitably impact on local services an the local economy

+ grossly underestimates the likely costs to councils from renewing each council's IT infrastructure following the merger

+ fails to consider the very real costs the council and local community will incur with a less responsive and larger council that has less intimate knowledge of local needs

+ ignores the large loss of council staff time and resources in implementing an unwelcome and often unsupported amalgamated council, and

+ has no regard to the informed academic opinions based on detailed empirical studies of past council mergers that proves forced amalgamations typically fail to generate financial sustainability for local councils.

The proposed merger would dramatically increase the ratio of residents to elected councillors to 15,499 residents per councillor, up from 3,708 in Ashfield, 4,845 in Leichhardt and 6,946 in Marrickville.

Each of these council areas has a strong and proud history of standing up to the NSW State government when the interests of their local residents and their local environment and heritage is at stake. Whether it is saving Callan Park, building cycling infrastructure or protecting local heritage, these are councils that vigorously represent the interests of their local residents.

Based on international comparisons there is not a good case for making any of these councils any larger. Sydney councils are on average almost four times larger than metropolitan councils across the developed world, with the average population of OECD metropolitan councils 27,224 and the average population of Sydney councils 104,493.


More detailed financial Material Relevant to Each Council

There are some significant variations between the figures outlined in the Government's proposal and the more accurate figures as reported in the councils' financial statements.

Ashfield: According to the government's merger proposal, the operating revenue in 2013/14 was $35.5 million. The actual result was $36.8 million in FY 2012/13 and $36.4 million in FY 2013/14. According to the proposal, the net operating result in 2013/14 was $0.6 million. The actual result was $2.8 million in FY 2012/13 and $0.6 million in FY 2013/14. According to the proposal, the asset base in 2013/14 was $206.9 million. The council's actual asset base was $270 million in FY 2012/13 and $304 million in FY 2013/14 (note the substantial increase, per council’s policy decision to run an operating deficit to strengthen the asset base). The proposal states that the infrastructure backlog was 12% in 2013/14, whereas the council’s IPART submission discloses 8.49% for 2013/14.  

Leichhardt: According to the government's merger proposal, the operating result in 2013/14 was $13 million, which reflects the actual result, though the proposal does not mention that this reflects a $6 million increase on the FY 2012/13 result. According to the proposal, the asset base in 2013/14 was $486.1 million. The council's actual asset base was $872 million in FY 2012/13 and $558 million in FY 2013/14. The proposal states that the infrastructure backlog was 7% in 2013/14, which reflects the council’s IPART submission. It does not, however, mention the reduction to 3.9% forecast by 2016/17.  

Marrickville: According to the government's merger proposal, the operating revenue in 2013/14 was $101.6 million. The actual result was $95.7 million in FY 2012/13 and $98.2 million in FY 2013/14. According to the proposal, the operating result in 2013/14 was $3.7 million, this reflects the actual FY 2013/14 result, which was up substantially on the $1 million result of 2013. According to the proposal, the asset base in 2013/14 was $572.1 million. The council's actual asset base was above $1 billion in FY 2012/13 and FY 2013/14 (more than double the stated amount). The proposal states that the infrastructure backlog was 1% in 2013/14, whereas the council’s IPART submission discloses a 2.2% backlog for 2013/14.