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Proposed amalgamation of Shellharbour City and Wollongong City

Shellharbour City and Wollongong councils were both found by IPART to satisfy the majority of financial criteria as stand-alone councils. Shellharbour failed the government’s arbitrary and ill-defined criteria of “scale and capacity" while Wollongong was found "fit for the future" given its large population size.

The government claims a forced amalgamation would see a total financial benefit of $95 million over a 20 year period. This includes a $20 million grant from the NSW government, which artificially inflates the so-called benefit and is paid for by the taxpayer. The alleged ‘saving’ component over 20 years is $75 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.

Given the size of the two local council's as employers in a region that is strongly focussed on retaining existing regional employment 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 job losses from amalgamations would hurt each council's local economy.

The proposed merger would dramatically increase the ratio of residents to elected councillors to 21,197 residents per councillor, up from 9,823 in Shellharbour and 15,907 in Wollongong.

Based on international comparisons there is not a good case for making any of these councils any larger. The state's metropolitan councils are, on average, significantly larger than metropolitan councils across the developed world. The average population of OECD metropolitan councils 27,224 and the average population of Sydney councils, for example is 104,493. Wollongong is already Australia’s ninth largest city with a population approaching 200,000.

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.

Shellharbour: According to the government's merger proposal, the operating revenue in 2013/14 was $90.9 million, which accords with the actual result. According to the proposal, the operating result in 2013/14 was $12.9 million. The actual result was $13 million in FY 2013/14with rounding. According to the proposal, the asset base in 2013/14 was $455.6 million. The actual asset base was $806.8 million. The proposal states that the infrastructure backlog was 11% in 2013/14, whereas the council’s IPART submission disclosed 11.16%, projected to reduce to 1.36% by 16/17.

Wollongong: According to the government's merger proposal, the operating revenue in 2013/14 was $255.9 million, which accords with the actual result. According to the proposal, the operating result in 2013/14 was $12.1 million, which accords with the actual result. According to the proposal, the asset base in 2013/14 was $1.5 billion. The actual asset base was $2.4 billion. The proposal states that the infrastructure backlog was 8% in 2013/14, whereas the council’s IPART submission disclosed 8.84%, projected to reduce to 6.43% by 16/17.