NSW Local government amalgamations are necessary but insufficient

This week is an important one for local government in NSW. It is the week that submissions from local councils are lodged with the NSW Independent Pricing & Regulatory Tribunal (IPART) to determine whether they are "fit for purpose" and able to retain their current arrangements or will be forced to inevitably merge with their adjoining neighbours.

Whether or not IPART is the appropriate agency to review such submissions is moot. Some would say that local government capacity is more than a bean counting exercise. Nevertheless, IPART, after recent changes to council rate capping arrangements approve local government rates, so they do have an appropriate understanding of local government performance and benchmarks.

Needless to say, from the reports so far in the public arena, enthusiasm for amalgamations from Sydney councils is rather feeble. In areas of Sydney where they obviously make sense – such as the very small councils in the inner and middle suburbs such as Burwood, Strathfield, Lane Cove etc – local councils have voted to oppose. It is not hard to believe that this resistance emanates from self-interest – whether it is from the elected body or from labour interests in the councils themselves. Irrespective of its basis, publicly opposition is inevitably dressed up as being an attack on localism or an attack on democracy itself. How it can be suggested that a system that allows a ratepayer in say Lane Cove to have a weight worth considerably more than one in Liverpool, is all too conveniently lost on the opponents to amalgamations.

But the real problem with the NSW amalgamation process is not amalgamations or not. Rather, it is the fact that it is just one-dimensional policy making. Rather than take the opportunity to rewrite how NSW improves local government administration, the one-dimensional approach of just pursuing amalgamations with little else changed, does the citizenry of NSW a huge disservice.

Take the democratic deficit in local government for a start. Most of local government mayors are elected amongst their peers with too few elected from the populace at large. This process results in local councillors preferring to engage in petty political deals rather than judiciously develop a policy manifesto that is agreeable to the wider population. After all, it is always easier to secure just 10 votes than it is to secure 10,000. A bigger picture view of local government reform would see the NSW government take active steps to foster popularly elected Mayors.

Of course, mandating Mayors by popular vote through legislation is one way of achieving this goal. But another way may be to be less interventionist and more in keeping with nudges or mutual obligation principles.

As mentioned previously, IPART has been empowered with approving rate increases beyond the NSW government rate cap. A more flexible approach would see Councils with popularly elected Mayors exempted from rate capping and IPART supervision altogether. Local councils enjoy the most efficient tax base available – land tax or council rates – and to the extent that local councils seek to deploy this tax for their own expenditure needs then they should be allowed to do so. After all, the ultimate accountability for the Council's financial decision making would reside with the populace through the election of their Mayor.

True local government reform would also see the encouragement of Independent Hearing & Assessment Panels for issuing consents on building and development applications. These panels, independent of the local elected body and populated with experts from the planning, design and the broader community at large, would be charged with the responsibility to determine applications according to the rules set by the elected body. The benefit would be that the elected body can dedicate themselves to the strategic questions of land use planning and design rules, rather than the administrative decision of whether this or that development meets the rules themselves. In other words, councillors would be rule making, just like legislators legislate. Decisions on how the rules are applied, just like courts apply law, would be reserved for an independent assessors. A better system of local government approvals would have manifest gains for economic development.

IHAPS already exist. Liverpool, one of the fastest growing local authorities in Sydney, has enjoyed such a panel for over a decade. Neighbouring Fairfield also has such a panel, as does Sutherland. These panels have survived despite NSW government legislative support and the time has come to extend their use across the NSW government system. When asked what they would prefer, amalgamated councils or independent hearing and assessment panels, business prefer the latter.

The opportunity exists for the NSW government to undertake genuine local reform beyond one trick pony amalgamations. Tackling the democratic deficit with measures that nudge popularly elected Mayors and a system of streamlined and independence in assessing development applications should be part of the policy mix. Amalgamations may well be necessary, but they are far from sufficient.

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