Mystery deepens over KPMG council merger report

It really seems like one of those yes-or-no questions.

But in what seems part Utopia and part Fawlty Towers, it's taken a week, two freedom of information requests, four e-mails and at least six phone calls to try to establish whether a report has been released by the NSW Government.

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NSW government promises no job losses in merger

NSW Premier Mike Baird and NSW Local Government Minister Paul Toole promise no rate rises or job losses in the merging of smaller councils. (Vision courtesy ABC New 24)

Even then, there are still two different answers. 

The state government has been touting a promised $2 billion in savings from its plans to cut the state's councils by nearly 40 in a series of proposed sweeping mergers.

Greens MP David Shoebridge speaking at the Save Our Councils Coalition meeting at Strathfield Town Hall.
Greens MP David Shoebridge speaking at the Save Our Councils Coalition meeting at Strathfield Town Hall. Photo: Dallas Kilponen

Consultants KPMG were paid about $400,000 for the report.

The Opposition, the Greens and anti-merger residents have all been calling on the government to show its working and release its report.


But the state government has been maintaining resolutely that it has already done so.

"The full KPMG report […] is publicly available," the state's Office of Local Government said. Government spokespeople briefed the same line in writing and on the phone.

Much of the advice behind the council merger process remains secret.
Much of the advice behind the council merger process remains secret. 

But what the government has released has been likened to a series of glossy brochures. They give readers a series of headline figures: Warringah and Pittwater councils will save $40 million over two decades if they merge, for example.

Missing is any sense of how that figure has been produced, how many fewer people the merged council might employ, how much less it might spend on computers, and so on.

Cracks started appearing in the government's claim last month.

A Fairfax Media reader requested a copy of the entire report from her local Liberal MP, only to be told it was "cabinet-in-confidence".

The government quickly said that its MP had just returned from holidays and was working on out-of-date information. The report has been released, it reiterated.

Last week, Premier Mike Baird gave an interview to his local paper in which he said the report's "key elements" had been released.

Then, Greens MLC David Shoebridge seemingly blew apart the government's claims to transparency. He requested, under freedom of information law, copies of all analysis and modelling by KPMG held by the Premier's department.

The answer was revealing. Three pieces of analysis had been released by the state government. A further 25 commissioned in the past year had not been, and remained confidential. 

Among the documents marked classified include a document showing how KPMG came up with its calculations, the options it canvassed for different configurations of mergers and a "business case" that seemingly laid out the nuts and bolts of the $2 billion figure.

"The Baird government's forced amalgamation push is based on secret documents that are being deliberately hidden," Mr Shoebridge said. "If the government's case was robust […] it almost certainly would have been shared.

"Most people would quite rightly call the whole thing a con."

The portion of the report the state government has released – a list of data sources KPMG used – came in for immediate criticism. Labor pointed out it was undercounting by half the cost of laying off council workers, while an academic said the report was "awash with errors"

A recent request by shadow local government minister Peter Primrose seeking a list of people KPMG spoke to for its report came back with three pages redacted.

Extraordinarily, Mr Shoebridge's request also showed that the government itself has no copy of KPMG's calculations because they are deemed the consulting giant's private property.

Studies of mergers in other states in Australia have generally been equivocal on the question of whether they save money and how soon.

Another report the government did release in October by another firm, EY, said that the idea that they saved money was "not provide[d] strong support" by economic analysis.

A spokesman for the Local Government Minister, Paul Toole, said: "KPMG's analysis and modelling of the merger proposals is entirely contained within documents that are publicly available."