Bigger councils not always better, but stronger ties an improvement
Efficient shared responsibilities between state and local governments ... what is needed in NSW is to reinforce localism through the involvement of communities with their local council.
Recent calls for the amalgamation of councils in NSW seem to be based on the simple principle that big is better. But reforming local government will be much more complex than relying on size alone.
The key issues are governance and financial sustainability and we need to take the once-in-a-generation opportunity presented by the independent local government review to restructure governance within the state. At the same time we must improve the financial sustainability of the local government sector for future generations. Governance in Australia has evolved through a series of accidental events to define states that then federated to form a national government and to delegate some responsibilities to the local level. If we started from scratch today we would have something quite different.
Australian communities rely on state governments to deliver most services including public transport, major roads, education, health and strategic planning. To get the governance balance right means working out what services are primarily local, what are primarily state and what are shared. In NSW many services have joint state and local responsibilities with a range of joint committees to manage the overlap.
Most of these committees operate at a regional level involving many councils such as the joint regional planning panels, the proposed regional planning boards, regional transport committees and regional economic boards. It is the regional level with populations of about 500,000 in urban areas and 200,000 in rural areas that seem to have developed into a shared structure between state and local governments.
There are, however, many different regional groupings of councils for different government departments and this must be rationalised into a uniform approach. Planning, for instance, has different boundaries for regional planning panels than it has for joint regional planning panels. The Regional Organisation of Councils boundaries don't seem to align with any of the other clusters.
An initial response to more regional shared responsibilities could be to force an amalgamation of all local councils into this structure but this would undermine the concept of ''local'' in local government and would not necessarily improve financial sustainability. While the world is fast becoming a single global network there seems to be a strong trend to refocus on local communities.
What is needed in NSW is to reinforce localism through the involvement of communities with their local council while ensuring that shared responsibilities between state and local governments occur efficiently.
One way forward that has been proposed to the independent review of local government by Gooding Davies is to establish a council of mayors at a regional level co-ordinating six or seven local councils in their dealings with state government.This exists in south-east Queensland, and a similar concept is under study in Perth.
Applying a regional structure to Sydney's metropolitan area would have six or seven councils of mayors, or regional organisations of councils each with six or seven local councils focusing on local issues. Sydney-wide governance would involve a council of Sydney governments, modelled on COAG, chaired by a minister for Sydney with the chair of each of the six or seven councils of mayors.
The other important issue is financial sustainability. Analysis by the former head of NSW Treasury Percy Allan has shown that more than a quarter of NSW councils are financially unsustainable, which could be as high as 40 per cent if major backlogs in infrastructure expenditure are included. The amalgamation of councils into bigger councils does not necessarily reduce costs, either. Modern businesses are looking at more flexible ways of doing business through outsourcing, using contractors and looking at sharing some services with other similar organisations.
Some councils are working closely with others in their region already, but most as lobby groups. Only in the Hunter have councils gone to the next stage, with a shared service centre, with 11 local councils contracting to a centre to manage services such as procurement, training and legal services.
To ensure financial sustainability clusters of councils should have shared service centres. The NSW review of local government is a once-in-a-generation opportunity to reform the sector. But this must be done by rethinking the partnership between state and local governments and developing a consistent regional structure without it becoming another layer of government.
Amalgamation of councils may well help with this reform but it is not on its own going to restructure governance in NSW.
Chris Johnson is the former government architect of NSW and is the chief executive of the Urban Taskforce.