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Proposed amalgamation of Corowa, Lockhart Shire and Urana Shire councils

Corowa, Lockhart Shire and Urana Shire councils were all found by IPART to be financially strong and sustainable as stand-alone councils. Corowa and Urana failed the the government’s arbitrary and ill-defined criteria of “scale and capacity” while Lockhart was found to be 'fit for the future' as a regional council due to its population size.

The government claims a forced amalgamation would see a total financial benefit of $27 million over a 20 year period. This includesa $20 million grant from the NSW government, which artificially inflates the so-called benefit and is paid for by the taxpayer. The ‘saving’ component is $7 million and would mainly 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.

As in much of regional and rural NSW, keeping councils and council jobs can mean the difference between keeping libraries, waste management, road safety and other essential services in local communities.

The proposed merger would increase the ratio of residents to elected councillors to 1,742 residents per councillor, up from 1,273 in Corowa, 342 in Lockhart and 127 in Urana.

 More Detailed Financial Material Relevant to Each Council

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

Corowa: According to the government's merger proposal, the operating revenue in 2013/14 was $16.9 million. The actual result was $30.6 million in FY 2012/13 and $31.8 million in FY 2013/14. According to the proposal, the operating result in 2013/14 was $2.7 million. The actual result was $3.3 million in FY 2012/13 and $4.3 million in FY 2013/14. According to the proposal, the asset base in 2013/14 was $242.2 million. The actual asset base was $342 million in FY 2012/13 and $347.1 million FY 2013/14. The proposal states that the infrastructure backlog was 18% in 2013/14, whereas the council’s IPART submission disclosed 14.81%, projected to reduce to 5.64% by 16/17.

Lockhart: According to the government's merger proposal, the operating revenue in 2013/14 was $9.8 million. The actual result was $13.2 million in FY 2012/13 and $10.1 million in FY 2013/14. According to the proposal, the operating result in 2013/14 was $2.6 million, which accords with the actual result. According to the proposal, the asset base in 2013/14 was $190.5 million. The actual asset base was $212.5 million in FY 2012/13 and $214.7 million FY 2013/14. The proposal states that the infrastructure backlog was 0% in 2013/14, which aligns with the council’s IPART submission.

Urana: According to the government's merger proposal, the operating revenue in 2013/14 was $6.7 million. The actual result was $9.7 million in FY 2012/13 and $8.5 million in FY 2013/14. According to the proposal, the operating result in 2013/14 was $1.2 million, which accords with the actual result – and improvement one the FY 2012/13result of $(0.7) million. According to the proposal, the asset base in 2013/14 was $92.9 million. The actual asset base was $102.4 million in FY 2012/13 and $104.6 million FY 2013/14. The proposal states that the infrastructure backlog was 12% in 2013/14, whereas the council’s IPART submission disclosed 13%.