No evidence that local government amalgamations will improve performance

The NSW government’s Fit for the Future reform program is largely premised on the recommendations of the Independent Local Government Review Panel, which proposed radical amalgamations.

There is no empirical support for the panel’s claim that amalgamation will improve council performance, says Brian Dollery. Photo: Phil Carrick SMH

Despite earlier assurances that it would be “evidence-based”, the panel simply relied on ideological assumptions that “bigger is better” in local government. The limited research that did occur was almost all farmed out to commercial consultants.

Given the Carr government’s forced mergers in 2004, had the panel competently approached its task it would at the very least have examined the impact of these forced amalgamations on council performance by comparing merged with unmerged councils against key performance indicators.

In fact, all the panel actually did was engage Jeff Tate Consulting to conduct a cursory non-quantitative assessment of only five merged councils which neither used key performance indicators nor compared merged with untouched councils.

Despite the absence of a rigorous empirical analysis of the 2004 amalgamations, the panel blithely recommended a harsh program of municipal mergers without a shred of supporting evidence. This dismayed the NSW local government sector as well as empirical scholars of local government.

As a consequence, we evaluated the 2004 mergers by comparing the performance of amalgamated councils against all NSW councils and against a group of peer non-merged councils in the same council classification category. We used the financial sustainability indicators developed by TCorp which have been adopted into the Fit for the Future program.

We found no statistically significant differences between merged and unmerged councils on all indicators. There is thus no empirical support for the panel’s claim that amalgamation will improve council performance.

The NSW public have every right to be dismayed by the waste of public resources on the inept panel and the prospect of a further futile waste of millions of dollars if the proposed mergers proceed.

Professor Brian Dollery and Dr Joseph Drew, Centre for Local Government, University of New England, Armidale.

Article appeared in the SMH, May 4, 2015

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