Proposed amalgamation of Murray and Wakool Shire councils
Murray and Wakool Shire councils were both found by IPART to be financially strong and sustainable as stand-alone councils. Murray Shire failed the government’s arbitrary and ill-defined criteria of “scale and capacity" while Wakool was found to be "fit as a regional council."
The government claims a forced amalgamation would see a total financial benefit of $20 million over a 20 year period. This includes a $15 million grant from the NSW government, which artificially inflates the so-called benefit and is paid for by the taxpayer. The ‘saving’ component is just $5 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 1,273 residents per councillor, up from 830 in Murray and 665 in Wakool.
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.
Murray: According to the government's merger proposal, the operating revenue in 2013/14 was $18.8 million. The actual result was $21.6 million in FY 2012/13 and $18.9 million in FY 2013/14. According to the proposal, the operating result in 2013/14 was $(1.3) million. The actual result was $2.6 million in FY 2012/13 and $(0.2) million in FY 2013/14. According to the proposal, the asset base in 2013/14 was $169 million. The actual asset base was $343.4 million in FY 2012/13 and $343.9 million FY 2013/14. The proposal states that the infrastructure backlog was 1% in 2013/14, whereas the council’s IPART submission disclosed 0.39%, projected to reduce to 0.16% by 16/17.
Wakool: According to the government's merger proposal, the operating revenue in 2013/14 was $14.8 million. The actual result was $19.5 million in FY 2012/13 and $17 million in FY 2013/14. According to the proposal, the operating result in 2013/14 was $(0.4) million, which aligns with the actual result. According to the proposal, the asset base in 2013/14 was $193 million. The actual asset base was $287.8 million in FY 2012/13 and $292.8 million FY 2013/14.The proposal states that the infrastructure backlog was 27% in 2013/14, which aligns with the council’s IPART submission, but which is projected to reduce to 0.18% by 16/17.