north sydney council - response to the nsw …...north sydney is a progressive, financially viable...

April 2016

NORTH SYDNEY

WILLOUGHBY

MOSMAN

North SydNey CouNCil:Response to the NSW Government’s

proposal to force a merger between

North Sydney Council, Willoughby City

Council and the Municipality of Mosman.

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preamble

Mike Baird, as the newly elected member for Manly in 2007, in his inaugural speech, said in part:

“I expect the Liberal Party to lead the restoration of a community-based party in this place. We should never be ashamed of listening to our conscience nor to our community—in essence this is why we are here.”

Council trusts you will consider the words of the man who is now Premier, and listen to the Community of North Sydney who have responded to the State Government’s proposal to forcibly merge North Sydney, Willoughby and Mosman with a clear “NO”.

Council notes your response to its request for access to the KPMG report, on which rests the NSW State Government’s entire amalgamation argument. In your letter of the 11 March 2016 you advise that the document is available on the Council Boundary Review website and is titled: “Outline of Financial Modelling Assumptions for Local Government Merger Proposals”. Council is aware of this document, and it is, as it says, an “outline of financial modelling assumptions”, it is not the report on which the NSW Government has rested its case.

Council notes that you are required, in your role of Delegate, to consider a number of factors in relation to the NSW Government’s forced amalgamation proposal including “the financial advantages or disadvantages of the proposal to the residents and ratepayers of the areas concerned”.

As Delegate you either have the full KPMG report, or you do not. If you do not have the full report Council submits that you are not in the position to consider the financial advantages or disadvantages.

Council, on behalf of its Community, has had the “Outline of Financial Modelling Assumptions for Local Government Merger Proposals – Technical paper” examined by Professor Brian Dollery. His report; “A Critical Assessment of Merger Proposal: North Sydney Council and Willoughby City Council”, a full copy of which is attached to Council’s submission, critiques the KPMG Technical Paper, and finds “the methodology employed by KPMG is awash with errors which renders its empirical analysis fatally flawed.”

“I expect the Liberal Party to lead the restoration of a community-based party in this place. We should never be ashamed of listening to our conscience nor to our community—in essence this is why we are here.”

Mike Baird Maiden Speech 2007

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Council questions how, given the evidence provided that the methodology employed by KPMG is fatally flawed, you would be in a position to consider that the NSW State Government’s financial merger benefit claims to hold any validity.

Council has also sought Professor Dollery’s views on the proposal to force a merger between North Sydney, Willoughby and Mosman. A copy of this report is also attached. Once again, the methodology used by KPMG is flawed.

Council notes you are required, in your role of Delegate, to consider “the attitude of the residents and ratepayers of the areas concerned”.

Council notes the results of the Community polling undertaken no less than 7 times since 1983 in relation to Council amalgamations, including the poll undertaken in March/April 2016 regarding the current NSW State Government proposal which indicated that 74% of respondents oppose the merger of North Sydney Council, Willoughby City Council and the Municipality of Mosman.

Council notes you are required, in your role of Delegate, to consider “the impact of the proposal on the ability of the council to provide adequate, equitable and appropriate services and facilities”

Council notes that it provides a number of services unique to the North Sydney community and that these services are likely to be adversely affected by the proposed forced merger, or that the costs to the North Sydney community to provide these services would rise. Professor Dollery refers to the impact of services within his attached report.

Council questions how the loss of services, or an increase in the cost to provide the services would benefit the North Sydney community.

Council notes you are required, in your role of Delegate, to consider “the requirements of the area concerned in relation to elected representation for residents and ratepayers at the local level, the desirable and appropriate relationship between elected

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representatives and ratepayers and residents and such other matters as considered relevant in relation to the past and future patterns of elected representation for that area”

Council notes that the North Sydney community councillor to resident ratio will be reduced to 1:13,020 under the NSW State Government’s forced merger proposal.

Council questions how the loss of democratic representation would benefit the North Sydney community.

Council trusts that you will, in the face of overwhelming evidence, and mindful of the Premier’s words of wisdom to listen to the community, recommend to the NSW State Government that they withdraw their proposal to force the merger of North Sydney Council, Willoughby City Council and the Municipality of Mosman.

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executive Summary

This submission should be read in conjunction with Council’s submission of 26 February 2016 in relation to the NSW State Government’s initial proposal to force a merger between North Sydney Council and Willoughby City Council.

The new proposal, whereby the NSW State Government seeks to force a merger between North Sydney Council, Willoughby City Council and the Municipality of Mosman does not offer a viable or acceptable alternative to the initial proposal, rather, the new proposal would result in a worse outcome for the residents and community of North Sydney.

The best interests of the residents and community of North Sydney would be met by North Sydney Council remaining a standalone entity.

North Sydney is a progressive, financially viable and highly regarded Council which consistently provides the highest levels of service to its residents and community at the lowest possible cost.

North Sydney Council delivers constant positive improvement to the services provided to its residents and ratepayers and this is reflected by high levels of community satisfaction, with resident satisfaction at 85% as at the 2013 Customer Satisfaction Survey.

Council has undertaken its own analysis, and consulted with the North Sydney Community and is determined to oppose the NSW State Government’s forced amalgamation proposal because:

• Theproposalhasnofinancialbenefitsbutwouldcausesignificant disadvantages to the community of North Sydney.

• TheNorthSydneycommunityhasnoCommunityofInterestwith Willoughby City Council’s or the Municipality of Mosman’s communities.

• PollingclearlyshowsthattheNorthSydneycommunitydoes not wish to merge with either Council area and polling undertaken by those Councils indicates their communities do not wish to merge with North Sydney.

North Sydney council and its community oppose the NSW Government’s proposal to force a merger between North Sydney council, Willoughby city council and the municipality of mosman.

the best interests of the residents and community of North Sydney would be met by North Sydney council remaining a standalone entity.

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Further:

• Thisproposaladdsasignificantlevelofcomplexityandcost – because it proposes forcibly merging three disparate Councils and their differing systems, staff conditions and cultures.

• Suchcomplexitywouldcausemanyyearsofdisruptionto each of the organizations and the communities they represent.

• Democraticrepresentationwouldbeseriouslyunderminedand weakened.

The NSW Government’s forced merger proposal and the process it is undertaking are flawed.

The NSW Government is rushing a process without adequate community consultation, debate and participation whilst relying on a report (the “KPMG Report”) to justify its position which it refuses to publicly release.

What is the NSW Government hiding?

1983 1987 1999 2004 2014 2015 2016 2016(ii)

Average

North Sydney Community’s Response to Amalgamation over time

8993

7874 71

76 7974

NO

0

20

40

60

80

100

3

The process is dishonest, fails any test of reasonableness and if unchecked will result in bad public policy which will adversely affect the residents and community of North Sydney.

The NSW Government showed scant regard for evidence as part of the first proposal, and even less for the latest. There is no evidence to suggest that the latest three-way merger would offer any benefits to the North Sydney Community.

The NSW Government should release the KPMG report and offer a valid and cogent case as to why North Sydney should merge with Willoughby and Mosman.

The Final report of the Independent Local Government Review Panel, released in 2013, recommended that North Sydney Council amalgamate with Hunters Hill, Lane Cove, Mosman, Willoughby and Ryde (part), or combine as a strong Joint Organisation1.

In September 2014 the NSW Government released its Fit for the Future program, with its Roadmap for Stronger, Smarter Councils.

This document stated that:

“A Fit for the Future council is one that is:

• Sustainable;

• Efficient;

• Effectivelymanagesinfrastructureanddeliversservicesforcommunities;

• Hasthescaleandcapacitytoengageeffectivelyacrosscommunity, industry and government.

These features will ensure that a council has the strategic capacity to governeffectivelyandpartnerwithindustryandStateGovernmentto deliver key priorities. This is crucial to helping Sydney grow and ensuring regions prosper.”2

the NSW Government’s forced merger proposal FailS its own goals

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Scale and Capacity was especially highlighted by the NSW Government:

“Scale is a key component of strategic capacity – both in creating individual councils with the resources and skills to provide leadership on regional planning and to advocate on behalf of communities by creating a system of local government where State and Local Governmentcanworktogethereffectively.”3

So significant was this issue that the document included a quote from IPART:

“Being of the right scale is a key component to having strategic capacity as it will enable councils to benefit from economies of scale and scope and be better able to provide infrastructure and services to their communities”.4

Councils were asked to prepare a submission by 30 June 2015 outlining how they either were Fit for the Future, or how they intended to become Fit for the Future and IPART was tasked with assessing council’s submissions.

The NSW Government was clear however that: “Havingtherightscale and capacity is the first step in becoming Fit for the Future”5, with scale and capacity becoming a “threshold criterion”6

Councils were told: “In making a FFTF proposal, councils must first assess their scale and capacity against the ILGRP’s recommendations..”7

It is noted that the NSW Government removed the option for Metropolitan councils to form Strong Joint Organisations, as recommended as an alternative by the Independent Local Government Review Panel.

This meant that councils had to assess their current situation with the only other recommendation available for them within the Independent Panel’s report. In the case of North Sydney, this was an amalgamation with Hunters Hill, Lane Cove, Mosman, Willoughby and Ryde (part).

the proposed forced merger between North Sydney council, Willoughby city council and the municipality of mosman Will NOt provide the Scale and capacity targets the Government has set.

“The [Queensland] Government certainly sold the idea that there would be economies of scale, better provision of services, but the exact opposite eventuated.” cr Julia leu, mayor Shire of Douglas

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the NSW Government moves the goal posts....again

the NSW Government is making it up as they go

North Sydney Council argued strongly that it was more than Fit for the Future as a standalone council, within its current boundaries.

IPART however determined that North Sydney was “NOT FIT”, as a result of not satisfying the scale and capacity criterion. IPART said: “Scale and capacity is a threshold criterion which councils must satisfy to be Fit for the Future (FFTF), therefore the council is not fit...”8

In January 2016 the Minister for Local Government lodged a proposal under section 218E(1) of the Local Government Act for the merger of North Sydney Council and Willoughby City Council Local Government areas

The Minister for Local Government, in a letter dated 25 February 2016 to the Acting Chief Executive of the Office of Local Government, makes a proposal to force a merger of North Sydney, Willoughby and Mosman following a letter he received from Warringah council on 24 February 2016 – that is, 1 day earlier.

The Minister has made the current proposal with:

• Nothought,

• Noinvestigation,

• Noevidence,

• Noconsultation,

• Nodiscussion,

• Noregardfordueprocess,and

• Noregardfordemocracy,

The latest proposal, using the NSW Government’s own criteria, would result in a council area which IS NOT Fit for the Future, as it would fail the scale and capacity threshold criterion.

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The NSW Government is trying to streamroll a forced amalgamation agenda without due process and by limiting community consultation.

The Government claims “four years of extensive consultation”10. This statement is dishonest; the NSW Government was previously proposing North Sydney Council merge with Mosman, Lane Cove, Willoughby, Hunters Hill and approximately two-thirds of Ryde. The current proposal is vastly different and requires proper consultation in its own right.

The State Government released its merger proposal to force a merger between North Sydney and Willoughby Councils on 6 January 2016 clearly within the annual holiday period when significant numbers of residents, councillors and council staff are on holidays.

Members of the public were permitted to attend one of only two public hearings on 2 February 2016.

All written submissions closed at 5pm on Sunday 28 February.

This latest proposal was lodged 25 February 2016, submissions will only be accepted to 8 April 2016.

Once again, only two public hearing sessions will be made available, none being in the North Sydney Council area.

The State Government’s proposal would have a profound effect on the North Sydney community, given this, it would not be unreasonable to hold a public hearing session in the local area.

This time frame leaves no room for proper public debate and/or community consultation

This is untenable and undemocratic.

Denying the community a voice

“We should never be ashamed of listening to our conscience nor to our community – in essence this is why we are here.

However, i believe we need to take this further and in the coming months i will seek to introduce into the party room of the liberal party another discretion, that is, the discretion that also allows members a free vote in matters that relate to the direct interests of their own community.”

mike baird maiden Speech 2007

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“..the methodology employed by KPMG is awash with errors which renders its empirical analysis fatally flawed...” professor brian Dollery

The NSW Government has relied on a KPMG report to derive its hypothetical financial benefits.

This report is the fundamental pillar on which rests the NSW Government’s position that North Sydney, Willoughby and Mosman ought to be forcibly amalgamated, and as a result, the NSW Government’s assumptions, figures and modeling must be subject to public scrutiny.

The NSW Government however, refuses to publicly release the report.

The NSW Government has condescended to release a KPMG authored document “Outline of Financial Modelling Assumptions for Local Government Merger Proposals – Technical Paper”

As part of the preparation of this and council’s previous submission, Council requested Professor Brian Dollery, on behalf of New England Education and Research Proprietary Limited, critically analyse the NSW Government’s forced merger proposal and the KPMG technical paper. Both reports by Professor Dollery are relevent to this submission.

He finds the KPMG technical paper; “awash with errors and inconsistencies....” which include:

KPMG erroneously based its costings for staff redundancy payments on the Commonwealth Fair Work Act 2009 National Employment Standards termination pay standards, rather than the NSW Local Government (State) Award 2014 and its redundancy provisions. This severely under-estimates the costs of amalgamation.

KPMG erroneously ignored the post-merger costs of service equalisation/harmonisation across the local authorities which have been merged. Experience gained from the 2008 Queensland amalgamation program has demonstrated that post-merger service provision is typically equalised upwards and this carries substantial costs. Ignoring this severely under-estimates the costs of amalgamation.

“..the methodology employed by KPMG... is severely flawed in a number of respects, not least in terms of unwarranted and indefensible assumptions which have no empirical basis” professor brian Dollery

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KPMG erroneously claimed that “savings” will apply to 80% of the category “Materials and Contracts expenditure” and will be “phased in” over 3 years. No evidence is provided to support the assumptions, and KPMG implicitly assumes that amalgamated councils have not entered into long-term contracts for the receipt of materials and services. This over-estimates hypothetical “savings”.

Professor Dollery identifies a host of specific problems with KPMG’s modelling:

KPMG Modelling Approach

Comment on KPMG Approach

Failure to Model Financial Assistance Grants (FAGs) Changes

Financial Assistance Grants (FAGs) are only subject to constraints imposed as a result of the 7 February 2006 proclamation under subsection 6(4) of the Commonwealth legislation for a period of four years. The KPMG (2016) modelling does not appear to respond to the Local Government (Financial Assistance) Act (1995) (CTH) in any way.

This is disturbing given that FAGs account for around a fifth of council revenue on average. Failure to model changes to FAGs risks over-estimating revenue (after four years) and thus over-estimating the savings arising from the mergers.

Failure to Model Service Harmonisation

Experience both in the 2004 NSW amalgamation process and the 2008 Queensland mergers has shown that - when two or more councils are merged - service levels across the new council entity are ‘harmonised’ by equalising service quality across the entity. The empirical literature on local government in other countries has demonstrated the same process (Dur and Staal, 2008; Steiner, 2003). Service harmonisation occurs to preserve the equitable service delivery within the newly amalgamated entity.

In practice, service levels are typically harmonised at the highest level enjoyed by the residents of each constituent council. This means that the costs of providing municipal services will increase as a result of harmonisation. KPMG (2016) has entirely failed to model service harmonisation which results in an overestimate of potential savings arising from amalgamation. Failure to model service harmonisation implies that KPMG believes that frequency and quality of municipal services will remain the same in each of the amalgamating entities post-merger! The net effect of overlooking service harmonisation is that KPMG (2016) underestimates the costs of mergers.

“Given that the estimates provided by KpmG for all the recommended mergers are inaccurate and greatly inflate the financial benefits involved, it is clear that neither Delegates nor the NSW boundaries commission can employ these KpmG estimates in their decision-making.”

professor brian Dollery

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Given that a new Mosman/North Sydney/Willoughby council will represent a large entity, service harmonisation costs will be substantial.

Savings from Materials and Contracts Expenditure

KPMG claim that ‘savings’ will apply to 80% of the category ‘Materials and Contracts Expenditure’ and will be ‘phased in’ over 3 years.

No evidence is provided to support these ‘assumptions’. KPMG (2016) implicitly assumes that amalgamating councils have not entered into long-term contracts for the receipt of materials and services. Furthermore, there is no justification for the linear implementation of savings from ‘materials and contract expenditure’. The net effect of these assumptions is to overestimate savings.

Value of efficiency saving assumed to be 3% for metropolitan councils and 2% for regional councils.

No empirical evidence is provided to support any of these assumptions. Moreover, in its other reports for NSW councils, KPMG has used different assumptions! For example, in its Bombala Council, Cooma-Monaro Shire Council and Snowy River Shire Council Merger Business Case (1 May 2015), KPMG stated that ‘a 1.5 per cent saving on Materials and Contract expenses has been applied’ (KPMG, 2015, p.21).

KPMG must explain why its present estimate differs from the estimate provided by it just eight months earlier.

In addition, Ernest and Young (2015) report that the KPMG analysis of Pittwater and Manly assumed a materials and contracts efficiency of 2% (and not 3%).

Moreover, other for-profit consultants have used different values in NSW. Thus, Morrison and Low employ a number of different assumptions for efficiencies derived from materials and contracts which range from 1% through to 5%. There is thus no clear consensus on the likely savings in this expenditure category.

Finally, if savings are possible in the procurement of materials and contracts and KPMG (2016) is correct in asserting that savings ‘are subject to scale’, then it follows that a system of centralised procurement for the entire state – along the lines employed in Queensland by the Queensland Local Government Association (LGAQ) - would produce far greater savings than any single amalgamation. Moreover, councils not subject to amalgamation would be able to share in KPMG’s (2016) assumed savings. State-wide procurement thus represents a far superior method of realising these savings to expensive mergers.

“No empirical evidence is provided to support any of these assumptions”


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Savings from Councillor Expenditure

KPMG (2016, p. 2) notes that ‘the number of councillors for a new merged entity mirror the highest number of councillors that currently exist in any one of the councils participating in the merger’.

This statement does not reflect the maximum number of councillors allowable under the Local Government Act (1993). Thus KPMG (2016) is asserting that there will be an avoidable reduction in the level of democratic representation for merged councils. Moreover, this procedure for determining the number of councillors will inevitably lead to very disparate levels of democratic representation between merged and unmerged councils.

KPMG (2016, p. 3) notes that ‘this figure is grown at a standard wage growth rate of 2.3 per cent over the period’

This is inconsistent with the 2015 Local Government Remuneration Tribunal determination. The NSW Remuneration Tribunal (2015, p. 14) made the following observation: ‘the Tribunal has reviewed the key economic indicators, including the Consumer Price Index and Wage Price Index, and finds that the full increase of 2.5 per cent available to it is warranted’.

KPMG (2016, p. 3) noted that ‘this [sic] savings are offset by the assumption that all newly elected councillors (metro and regional) will receive a fee of $30,000 per annum’.

The most recent determination for councillor and mayoral fees includes nine different rates (depending on the categorisation of council in the NSW OLG classification system). For instance, ‘county councils other’ councillor fees are set at a minimum of $1,660 and a maximum of $5,490. The ‘county council other’ mayoral fees range from a minimum of $3,550 through to a maximum of $10,020.

By way of contrast, councillor fees for ‘principal city’ councils range from $25,040 through to $36,720, whilst mayoral fees for the same category range from $153,200 through to $201,580.

It should thus be clear that an assumption of $30,000 for every council is deeply flawed. Moreover, KPMG (2016) has not even attempted to differentiate between savings relating to mayors as opposed to councillors.

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Savings from Reduced Salary and Wage Expenditure

KPMG (2016, p. 3) notes that ‘staffing reductions are assumed to occur gradually with a modest level of voluntary attrition in the first three years of amalgamation’.

No empirical evidence is provided by KPMG (2016) to support this claim.

As we have seen from the 2008 Queensland merger process, total staff expenditure for the amalgamated cohort of councils in Queensland rose for each of the three full financial years following the 2008 amalgamations. This is clear from evidence obtained from audited financial statements of each of the affected councils, in addition to the Queensland Department of Infrastructure and Planning Queensland Local Government Comparative Information 2008-2009.

Moreover, the average annualised rate of growth in staff expenditure for the amalgamated cohort in Queensland (7.795% p.a.) was far higher than that of the non-amalgamated cohort (6.031% p.a.) in nominal terms for the first three full financial years.

KPMG (2016) claims there will be savings from Tier 4 and Tier 3 positions

KPMG (2016) do not state what rate of savings was used for these senior management positions. However, given that General Manager and Director entitlements are the subject of individually negotiated contracts, it is highly unlikely that modelling employing a single rate of savings would be in any way satisfactory or reflective of what will occur in a specific merger.

KPMG (2016, p. 3) claim that ‘overall staffing efficiencies were estimated at 7.4 per cent for metropolitan mergers [and] 3.7 to 5 per cent’ for regional councils’.

No empirical evidence has been provided by KPMG (2016) to support this critical claim.

The efficiency estimate for regional councils (3.7 to 5 per cent) by KPMG (2016) in January 2016 differs markedly from the estimate provided by KPMG (2015, p.21) to Snowy River, Bombala and Cooma-Monaro ‘estimated to be approximately 6 per cent on a FTE basis’. KPMG should explain why this estimate has changed so markedly in the past eight months. Actual empirical evidence based on the entire cohort of Queensland councils suggests that little or no efficiencies relating to employee costs can be reasonably expected. Based on seven full financial years of data following the Queensland mergers, the average annualised rate of growth in nominal terms for employee expense is far higher for the amalgamated cohort (4.997% p.a.) than the non-amalgamated cohort (3.724% p.a.). In making these calculations, we have not made any claims about initial savings made as a result of terminating senior appointments.

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Our data relates to the rate of change in employee expense for the full financial years following amalgamation. Queensland also had a moratorium on forced redundancies for a period of three years.

Merger Cost Components

ICT costs Evidence for the KPMG (2016) ICT assumptions is cited as a ‘select number of industry representatives consulted by DPC’ and ‘analysis undertaken by KPMG based on advisory services to Queensland local councils involved in de-amalgamations’ (KPMG, 2016, p. 5). However, details of the industry experts consulted and the estimates which they advised should be disclosed for full transparency.

The reference to KPMG analysis for the de-amalgamations is worrying, given that the figures cited in the modelling assumptions (ranging from $2.26m through to $3.35m) are completely at odds with estimates cited by the Queensland Treasury (QTC) which had ‘engaged KPMG to estimate the information and communication technology costs of de-amalgamation’ (QTC, 2012, p. 16).

The QTC (2012) estimate for the de-amalgamation of Sunshine Coast Regional Council was $1,176,000 (QTC, 2012, p. 16).

‘Transition costs are estimated to be 2 per cent of a merged entity operating expenditure in the first year of operation’ (KPMG, 2016, p. 6)

No evidence is provided to support this claim. However, Drew and Dollery (2015) noted that the Queensland Treasury Corporation (QTC) (2009) Review of Local Government Amalgamation Costs Funding Submission: Final Summary Report had gathered information from councils forcibly merged in Queensland in August 2007. Reported ‘first-round’ costs were $9.3 million (mean) for metropolitan councils and $7.994 million (mean) for regional/rural councils’ (Drew and Dollery, 2015, p. 3). There is no evidence of an association between amalgamation costs and operating expenditure as presumed by KPMG (2016).

Costs from redundancies

Redundancies The KPMG claim is predicated on the assumption that (a) there will be redundancies after the three-year moratorium, and (b) that senior staff contracts include redundancy clauses. Empirical evidence from the Queensland amalgamations calls into question assumptions regarding redundancies (see discussion above on ‘Savings from Reduced Salary and Wage Expenditure’).

“it is assuredly the case that controversial and divisive mergers, such as the proposed mosman/North Sydney/Willoughby amalgamation, cannot be prescribed on the basis of demonstrably false financial estimates, especially in the absence of the detailed calculations contained in the embargoed KpmG (2015) Local Government Reform: Merger Impacts and Analysis.”


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KPMG (2016, p. 7) claimed that ‘based on established practices and the average tenure for the sector, the redundancy payment would be provided for sixteen (16) weeks’. KPMG (2016) then makes reference to the ‘Fair Work Ombudsman (2014), Redundancy pay and entitlements schedule’.

As we have already noted, local Government general staff in NSW are covered by the Local Government (State) Award, not a federal award as ‘assumed’ by KPMG. Employees are entitled to up to 34 weeks of pay (for employees of 10 years standing or higher) on a scale associated with the number of years of service.

An assumption of 16 weeks (equivalent to the entitlement of an employee with 4 to 5 years of service in terms of the table on redundancy entitlements in NSW Local Government (State) Award 2014, p.308) is a gross oversimplification. It amounts to an assumption that the average person laid off has a period of service of just over 4 years. This does not reflect the reality of local government employment in NSW, where employees typically have long periods of service.

The NSW Governments supporting information for its proposed forced merger of North Sydney and Willoughby named a number of projects and claimed falsly that they would benefit from a merger. This included:

Upgrades to the Neutral Bay and Cremorne shopping and commercial strip

This project is currently underway and does not require a merger to complete it. Merging councils may actually stop the completion of the work if priorities change under a newly elected merged Council body.

Gore Hill Park Recreation development Project

This project rests within the Willoughby Council area. Merging Willoughby and North Sydney councils will have no effect on the outcome of this project unless a newly elected council determines it is no longer a priority.

Bradfield Park and Kirribilli Foreshore Upgrade

This project is part of North Sydney councils long term plan and is being undertaken in a staged way and does not require a merger to complete it. Merging councils may actually stop the completion of the work if priorities change under a newly elected merged Council body.

a merger may jeopardise important community infrastructure projects

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The merger proposal (North Sydney and Willoughby) on page 4 states that “North Sydney Council is seeking a SRV (Special Rate Variation) of 4.5% over one year in 2019-20”.

This is false.

A reference was made to a hypothetical SRV in Council’s Submission to IPART, however, this does not form part of Council’s Long Term Financial Plan, nor has an SRV been considered by Council.

North Sydney Council has no local infrastructure backlog, whilst Willoughby has an almost $11 million shortfall, and Mosman’s shortfall is almost $7 million.

In 2014/15 North Sydney Council spent more than the required amount of $4.59 million to maintain its infrastructure, whilst Willoughby and Mosman spent less than their required amounts as the following table demonstrates:

Council Estimated Cost to Bring Infrastructure to Satisfactory Standard

Required Annual Maintenance on Infrastructure

Actual Annual Maintenance on Infrastructure

Over/(under)

North Sydney

NIL 4,598 5,111 513

Willoughby 10,977 8,049 6,060 (1,989)

Mosman 6,956 2,996 2,906 (90)(Local Infrastructure Liabilities 2014/15 $’000)

“…it is clear that an amalgamation forced upon the residents of North Sydney and Willoughby will generate severe inequities for North Sydney Residents.”professor brian Dollery

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The merger proposal (North Sydney and Willoughby) on Page 2 outlines a list of projects that “a new council will be better able to provide..”

HMAS Platypus Site Remediation Project.

The HMAS Platypus Site Remediation Project is managed by the Sydney Harbour Federation Trust. The Sydney Harbour Federation Trust is a self-funding agency created by the Australian Government. The responsibility for this site does not vest with North Sydney Council, nor would it vest with a merged council.

Despite this, North Sydney Council and the Sydney Harbour Federation Trust have been actively involved in the preservation of this significant public asset.

The NSW Government’s forced merger proposal states: “it is assumedefficiencysavingsaregeneratedfromamerger”. However, Professor Dollery finds, with evidence from recent Queensland council mergers, that “two years following the mergers the average technicalefficiencyscoreoftheamalgamatedcouncilswaswellbelow the non-amalgamated cohort”

This results from increasing expenditure on staffing expenses and comparatively larger capital inputs.

The back page of the NSW Government’s forced merger proposal contains a disclaimer which says;

“Whileeveryreasonableefforthasbeenmadetoensurethatthe facts contained within this document are correct at the time of printing the State of NSW, its agents and employees, disclaim any and all liability to any person in respect of anything or the consequences of anything done or omitted to be done in reliance or upon the whole or any part of this document”

The NSW Government refuses to release the KPMG report – the document on which its entire basis for forced amalgamations rests.

the NSW Government’s forced merger proposal contains errors of fact

a merged North Sydney/Willoughby city and mosman council’s will be less efficient

the NSW Government’s claims are so tenuous the forced merger proposal comes with a disclaimer

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Councils, the community, the Delegate and the Boundaries Commission are therefore forced to rely on a document which the NSW Government disclaims any responsibility for.

The NSW Government has committed “to freeze existing rate paths for four years….”

The services offered to residents by North Sydney Council differ to those offered by Willoughby City Council and the Municipality of Mosman. For example, North Sydney Council undertakes verge mowing throughout the council area. It also offers free fortnightly household waste cleanups. Both services are highly valued by residents.

Under a merged Council, verge mowing and fortnightly household waste cleanups will either be introduced across the two other Council areas, removed from the North Sydney Council area, or remain in the North Sydney area but not be provided in the Willoughby and Mosman areas. These are the possible combinations.

If the services are provided to Willoughby and Mosman residents, and rates are frozen, North Sydney residents will be required to pay to provide these services to the Willoughby and Mosman Council areas by a reduction in other service areas. If Willoughby and Mosman residents are not afforded the service, there is a matter of equity, which is politically untenable. If the services are removed from North Sydney residents, then North Sydney residents will be worse off under the merger.

Professor Dollery’s analysis suggests post merger service provision equalises upwards. If this occurs costs to North Sydney residents and community will increase.

Cut or reduced serviced levels or rising costs for the North Sydney Community is not acceptable.

Services to the North Sydney community will be cut or reduced, or costs to North Sydney residents and community will rise

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the North Sydney community DOeS NOt share similar characteristics to the Willoughby community nor the mosman community

North Sydney is recognized as part of Global Sydney, Willoughby is not – neither is mosman

The dwelling types from each Community are as follows:

Dwelling Type North

Sydney

Willoughby Mosman

Separate House 3,937 12% 12,292 46% 4,176 35%

Semi-detached, terrace, townhouse

4,166 13% 1,923 7% 1,347 11%

Flat, unit, apartment

20,175 63% 10,424 39% 5,160 43%

Other/unoccupied 3,677 12% 2,081 8% 1,302 11%

Total Private Dwellings

31,955 26,720 11,985

[Source: ABS Census 2011]

The table clearly demonstrates the differences between the three council areas.

• 46%ofWilloughbyresidentsliveinseparatehousing,compared with 35% in Mosman and 12% in North Sydney

• 63%ofNorthSydneyresidentsliveinapartments,compared with 39% in Willoughby and 43% in Mosman

The North Sydney residential area is inner urban, consisting of high and medium density apartments, joining a vibrant and nationally significant CBD. This is very different to the residential areas of Willoughby and Mosman, which are significantly more suburban, as the following graph clearly demonstrate.

Graph 1

12

63

35

43 4639

North Sydney

Key

ApartmentsHouses

Mosman Willoughby0

20

40

60

80

100

18

North Sydney has a track record of working with the State Government to deliver State policy and infrastructure, including the North Sydney Station upgrade.

North Sydney Council provides for the specific requirements of inner urban living, with services such as fortnightly free household waste cleanups – necessary due to the large number of renters in the area and the usual renter turnover. Neither Mosman nor Willoughby Councils offer this level of service.

The North Sydney council area is different to the Willoughby and Mosman areas in numerous ways.

Detailed comparative data is set out at the end of this submission.

North Sydney Willoughby MosmanAverage ordinary residential rate

$631.90 $864.35 $1,208.75

Average Business rate

$3,337.20 $6,017.66 $2,657.19

[Source: OLG 2013/14]

Despite the NSW Government claiming that they will “freeze existing rate paths for four years”12, over time, rates will be harmonized to the highest point.

• Mosman’saverageordinaryresidentialrateis91.28%higher than North Sydney’s

• Willoughby’saverageordinaryresidentialrateis36.79%higher than North Sydney’s

• Willoughby’sbusinessrateis80.32%higherthanNorthSydney’s

North Sydney ratepayers will be worse off.

“There will be no long-term economic benefits if the communities are ungovernable because of Divison” (11)

rates will rise in North Sydney

“...rates typically rose to the levels of the highest rating constituent council.”


19

Graph 3 – Residential Rate Comparisons

The NSW Government’s forced merger proposal will mean the loss of democratic representation.

The NSW Government proposed in their forced merger proposal between North Sydney, Willoughby and Mosman councils that a merged entity will have a maximum of 13 Councillors.

Following a referendum in 2012 North Sydney Council will reduce its councillor numbers to 10 following the scheduled 2016 elections.

This will provide for a councillor to resident ratio of 71,025 / 10 = 1:7,103

The proposed merged council area would have a total population of 67,722(North Sydney) + 71,933 (Willoughby) + 29,605 (Mosman) = 169,260

This would result in representation being:

169,260 / 13 = 1:13,020

This is a significant difference.

A 2015 study undertaken by Woolcott Research and Engagement on behalf of Council found that 35% of residents had personally contacted a Councillor within the past 12 months, with a further 12% of residents personally contacting a Councillor within the past 2 to 3 years.

513.40

$

828.97

1,181.45

Average Ordinary Residential Rate

0

200

400

600

800

1000

1200

NORTH SYDNEY

WILLOUGHBY

MOSM

ANNorth Sydney ratepayers enjoy some of the lowest average rates in the Sydney metropolitan area.

“North Sydney residents can expect an exponential increase in business rates and residential rates, as well as fees and charges”professor brian Dollery

Democratic representation will be lost

20

North Sydney has a long history of strong community engagement, which demonstrates the tradition and commitment to the principles of open government.

The research also found that 65% of respondents perceived that there would be a negative impact from having less Councillor representation.

The loss of democratic representation will have a detrimental effect on the community of North Sydney.

North Sydney Council, since the 1970s, has had a thriving community precinct system which enables residents to play an active and ongoing role in providing input into the operations of the Council.

The Precinct System is a key part of Council’s commitment to open government through ongoing communication and consultation, and encourages resident involvement in Council decisions.

Neither Willoughby City Council nor the Municipality of Mosman have precinct systems.

North Sydney Council has a long history of rigorous community consultation and polling. Council has polled the community numerous times since 1983 regarding amalgamations, and in each case the overarching result has been “No”.

1983 Do you favour the amalgamation of North Sydney Council with any other Council(s) to create a larger local government authority for this area? 89% said NO

North Sydney councils’ community precinct System will be lost

21

1987 Do you favour the amalgamation of the whole of the Municipality of North Sydney or any part of it with the Council of the City of Sydney? 93% said NO

1999 Are you in favour of North Sydney Council amalgamating with any of the following Councils?

(a) Lane Cove ..............................82.08% NO

(b) Mosman .................................63.55% NO

(c) Willoughby ............................76.81% NO

(d) City of Sydney ......................88.23% NO

2004 Are you in favour of North Sydney Council amalgamating with any of the following Councils?

a. Lane Cove ................................73.40% NO

(b) Mosman .................................63.80% NO

(c) Willoughby ............................69.30% NO

(d) City of Sydney ......................78.40% NO

2014 Are you in favour of amalgamating with Mosman, Willoughby, Lane Cove, Hunters Hill and part of Ryde? 71.4% said NO

2015 Are you in favour of amalgamating with Mosman, Willoughby, Lane Cove, Hunters Hill and part of Ryde? 76% said NO

2016 (i) Do you support the State Government’s forced amalgamation of North Sydney and Willoughby City Councils? 79.04% said NO

the NSW Government’s forced merger proposal fails to consider the attitude of the residents and ratepayers of the areas concerned

the community says ‘No’ to forced amalgamations

22

2016 (ii) Do you support the State Government’s forced amalgamation of North Sydney, Willoughby and Mosman councils? 74.1% said NO

Graph 4

Willoughby Council surveyed their community before responding to IPART.

A clear majority of respondents from the Willoughby Community preferred to stand alone.

1983 1987 1999 2004 2014 2015 2016 2016(ii)

Average

North Sydney Community’s Response to Amalgamation over time

8993

7874 71

76 7974

0

20

40

60

80

100

Willoughby residents also want to stand alone

23

Graph 5

Mosman have also, over many years, consulted their Community on amalgamations. Results clearly indicate an opposition to merging:

1962 .........................................91.0% oppose amalgamation




2004 ........................................79.4% oppose amalgamation

The NSW Electoral Commission, on behalf of Mosman Council, and in conjunction with the 2012 Local Government elections, conducted a poll of voters in the Mosman Council area. The question was:

“Do you favour the amalgamation of Mosman Council with any other Council(s) to create a larger Local Government Authority?”

18.69% voted yes, while 81.31% voted no.

In 2014, Mosman Council widened their polling and provided resident an opportunity to consider different amalgamation scenarios.

mosman residents also oppose amalgamation

Stand Alone W+NS W+NS+LC W+NS+LC+HH+M+2/3R

No Response

44.5

27.3

9.6

3.8

14.7

Willoughby Community’s Response to Amalgamations

W - WilloughbyNS - North SydneyLC - Lane CoveHH - Hunters HillM - MosmanR - Ryde

0

10

20

30

40

50

24

Option 1

Maintain Mosman’s independence along with extensive collaboration with other councils, especially with SHOROC

Result: 82% strongly support maintaining independence

Option 2

Mosman Council ‘mega merger’ with North Sydney, Lane Cove, Hunters Hill, Willoughby and part of Ryde Councils

Result: 84% strongly oppose the mega merger

Option 3

Mosman Council merger with North Sydney Council

Result: 61% oppose this option

Option 4

Mosman Council merger with Manly Council

Result: 62% oppose this option

As Delegate, you are required to consider “the attitude of the residents and ratepayers of the areas concerned”

The results are clear; the residents of Mosman wish to remain independent. They do not wish to merge with any other Council area.

At 30 June 2015 the three Councils investment property and investments were as follows:

Investment Property Investments

North Sydney $79.570 million $94.534 million

Willoughby $67.717 million $78.847 million

Mosman $48.950 million Zero

The differences are huge.

25

Transition, merger and disruption costs will significantly impact on Council’s portfolio, and valuable assets will be sold. The North Sydney Community will be disproportionally disadvantaged due to the higher value of Council properties especially in the Southern portion of a merged entity.

The merger proposal (North Sydney and Willoughby) notes that a merger will result in “Regulatory benefits including consistency in approaches to development approvals…”(Page 4), and highlights “..a number of regional priorities that are directly relevant to the proposed new council. For example: strengthening North Sydney, St Leonards and Chatswood as strategic centres...”

A Plan for Growing Sydney identifies St Leonards as a “strategic centre” and states that better governance of strategic centres is desirable. Currently North Sydney, Willoughby and Lane Cove Councils all have involvement with the St Leonards Centre as a result of existing local government boundaries.

If the State Government truly believed that the St Leonards centre was strategically significant the merger proposal would have included it in its entirety, removing that part of the St Leonards centre which vests with Lane Cove Council area, and incorporating it into the proposed merged Council area along the lines outlined in the following map.

council’s investment portfolio is at risk

the proposal fails to consider the St leonards Strategic centre in any strategic way

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cONcluSiON

Council has more than adequately addressed the NSW State Government’s forced merger proposal, and the evidence against proceeding is clear.

The financial disadvantages of the proposal to the residents and ratepayers of North Sydney are set out on Pages 5, 8-13 and 18.

Details of how North Sydney, Willoughby and Mosman have no Community of Interest are set out on Pages 17 and 18.

Historical and traditional values, especially as they manifest in the provision of local democracy via the Precinct committees are discussed on Page 20.

The attitude of the residents and ratepayer of North Sydney, Willoughby and Mosman who clearly do not want to be merged into a single Council area is dealt with on Pages 20-24.

The requirements of the local area in relation to elected representation for residents and ratepayers, which would be significantly diminished under a forced merger scenario is dealt with on Pages 19.

Council services would be diminished, or costs to provide these services would rise, this is discussed on Pages 14, 16 and 18.

Other factors, such as the lack of Government transparency, the refusal to release the KPMG report, errors within KPMG’s methodology and the lack of a strategic overlay of the St Leonards Centre are dealt with in various parts of Councils submission.

Council trusts that you will, in the face of overwhelming evidence, recommend to the NSW State Government that they withdraw their proposal to force a merger of North Sydney Council, Willoughby City Council and Municipality of Mosman.

each of these relevant legislative criteria have been addressed in this proposal

there is no basis to merge North Sydney and Willoughby councils

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1 “Revitalising Local Government” – Final Report of the NSW Independent Local Government Review Panel, October 2013, page 1042 Fit For the Future: A Roadmap for Stronger, Smarter Councils, Office of Local Government, September 2014, page 63 Fit For the Future: A Roadmap for Stronger, Smarter Councils, Office of Local Government, September 2014, page 84 Fit For the Future: A Roadmap for Stronger, Smarter Councils, Office of Local Government, Sep-tember 2014, page 85 IBID, Page 96 IPART: Methodology for Assessment of Council fit for the Future Proposals, June 2015, Page 57 IPART: Methodology for Assessment of Council fit for the Future Proposals, June 2015, Page 58 IPART: Assessment of Council Fit for the Future Proposals: Appendix C, October 2015, Page 3079 NSW Government Merger Proposal: North Sydney Council Willoughby City Council 10 Merger Proposal: North Sydney Council Willoughby City Council. The “merger proposal”) Page 211 NSW local government amalgamations: Data key to community support, Davis Crisafulli, Simon

Finn, Feb 2016 12 Merger Proposal: North Sydney Council Willoughby City Council. Page 2

north sydney council - response to the nsw …...north sydney is a progressive, financially viable...

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