Read The Times Australia

Daily Bulletin

Do mergers make for better councils? The evidence is against 'bigger is better' for local government

  • Written by: The Conversation Contributor

Hard-pressed ratepayers in New South Wales and Queensland need no reminding of the perils of municipal amalgamation. NSW experienced a sharp dose of forced mergers in 2004. Queenslanders underwent draconian council consolidation under the Beattie government in 2008.

NSW is now on the cusp of a further round of mergers being inflicted on unwilling councils.

In all three cases, the architects of compulsory amalgamation have been under the sway of the dogma that “bigger is better” in local government. Ratepayers are told amalgamation will herald a new dawn of lower rates, cheaper services, improved service quality, enhanced financial viability and superior administration and planning.

In NSW, the Baird government has especially emphasised the financial advantages of municipal amalgamation. These claims are typically presented as the outcome of careful research and deliberation.

Mergers tested in a real-world experiment

Are these claims consistent with the empirical evidence? My colleagues Brian Bell and Joseph Drew and I investigated this question for NSW’s 2004 forced amalgamations.

We took advantage of being able to use 2014 data to compare the performance of merged councils with their unmerged counterparts over ten years.

image The Carr government’s 2004 council mergers provide a basis for comparing the impacts over the following decade. AAP/Mick Tsikas

We compared amalgamated “general purpose” councils with their un-amalgamated peer councils in the same local government classification. We thus had the benefit of a “natural experiment”, being able to compare the two groups of “like” councils against a common set of performance indicators.

Our peer-reviewed research paper will be published shortly.

The criteria we used for this comparison included four the Baird government is using under its “Fit for the Future” program – operating performance, own-source revenue, building and infrastructure renewal, and asset maintenance ratios – as well as council employees per capita.

We found no statistically significant differences in the performance of the two groups of councils against these criteria. This falsifies past claims by the Carr Labor government that its forced amalgamations would substantially improve NSW local government financial performance. It also undermines the Baird Coalition government’s claims for its proposed mergers.

Evidence mounts against ‘bigger is better’

Other research provides additional damning evidence. For example, Joseph Drew, Mike Kortt and I examined the outcomes of forced amalgamations in Queensland in 2008. These reduced the number of councils from 157 to just 73.

image Some of the council mergers pushed through in Queensland in 2008 under the Beattie government have since been reversed. AAP/Dave Hunt

Our research demonstrated that this resulted in a greater proportion of councils exhibiting diseconomies of scale. That is, mergers created entities that were simply too large to be run efficiently.

Furthermore, of the 31 new councils the mergers created, 58% exhibit decreasing returns to scale. Comparing their efficiency through time, we found merged councils performed worse than unmerged councils.

Finally, Elizabeth Sinnewe, Mike Kortt and I recently tested the claim that “bigger is better” by examining the financial performance of Australia’s largest council by population, Brisbane City. In our recently published analysis, we compared Brisbane City Council to Sydney City Council, the average of six southeast Queensland councils and the average of ten metropolitan NSW councils.

We did so using four measures of financial performance – financial flexibility, liquidity, debt service capacity and asset management. Between 2008 and 2011, the three comparator groups outperformed Brisbane Council in financial flexibility, liquidity and debt-servicing ability.

Taken together, these three papers cast doubt over the continuing dogma that “bigger is better”. They also add to the empirical literature on municipal mergers by demonstrating that “biggest is not best” either.

In particular, the financial performance of local authorities does not improve as advocates of amalgamation contend. On the contrary, amalgamated municipalities often perform worse than their unmerged counterparts.

Amid the controversy over the Baird government’s compulsory council consolidation program, our findings underline the foolishness of making public policy in an “evidence-free” manner.

If forced amalgamations proceed, we may well see hundreds of millions of dollars in taxpayer and ratepayer funds squandered simply because policymakers preferred dogma to empirical evidence.

Authors: The Conversation Contributor

Read more http://theconversation.com/do-mergers-make-for-better-councils-the-evidence-is-against-bigger-is-better-for-local-government-56813

Business News

Why Choosing the Right Bollard Supplier Matters for Australian Businesses and Public Spaces

From busy CBD streetscapes to sprawling warehouse loading docks, bollards have become one of the most essential safety and security fixtures across Australia. Whether protecting pedestrians from veh...

Daily Bulletin - avatar Daily Bulletin

Why Modular Content Is Transforming Modern Marketing Teams

Modern marketing teams are expected to produce more content than ever before. They need to support websites, landing pages, email campaigns, social channels, product pages, sales enablement material...

Daily Bulletin - avatar Daily Bulletin

Everything You Need to Know About Getting Support from Optus

Whether you've been an Optus customer for years or you've just switched over, at some point you'll probably need to contact their support team. Maybe your bill looks different from what you expected. ...

Daily Bulletin - avatar Daily Bulletin

The Marketing Strategy That’s Quietly Draining Sydney Business Owners’ Bank Accounts

Sydney businesses are investing more in digital marketing than ever before. The intention is clear. More visibility should mean more leads, more customers, and steady growth. However, many business ...

Daily Bulletin - avatar Daily Bulletin

Why Mining Hose Solutions Are Essential For High-Performance Industrial Operations

In environments where the ground itself is constantly shifting, breaking, and being reshaped, every component must be built to endure. Mining operations are among the most demanding in the industria...

Daily Bulletin - avatar Daily Bulletin

The Reason Talented Teams Underperform

If you’re in business, you might have seen it before. A team of capable and smart people just suddenly slows down, and things start spiraling out of control. On paper, everything looks perfect, but ...

Daily Bulletin - avatar Daily Bulletin

Why More Aussie Tradies Are Moving Away From Paid Ads

Across Australia, a lot of tradies are busy. There’s no shortage of demand in industries like plumbing, electrical, landscaping, and building. But being busy doesn’t always mean running a smooth or...

Daily Bulletin - avatar Daily Bulletin

Why Careers In The Defence Industry Are Growing Rapidly

The defence sector has evolved far beyond traditional roles, opening doors to a wide range of opportunities across technology, engineering, intelligence, and operations. This is where defense industry...

Daily Bulletin - avatar Daily Bulletin

Strategic partnerships to enable global acceleration for Aussie fashion brands: SHEIN Xcelerator launches

SHEIN Xcelerator is introducing a more agile, demand-led operating model, allowing brands to scale while retaining control over creative direction and identity. For fashion brands, the pressure t...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

Australia’s Best Walking Trails and the Shoes You Need to Tackle Them

Australia is not short on spectacular walks. You can follow ocean cliffs in Victoria, cross ancien...

Why Pre-Purchase Building Inspections Are Essential Before Buying a Home in Australia

source Have you ever walked through an open home and started picturing your furniture, family d...

5 Signs Your Car Needs Immediate Attention Before It Breaks Down

Car problems rarely appear without warning. In most cases, your vehicle gives clear signals before...

Ensuring Safety and Efficiency with Professional Electrical Solutions

For businesses in Newcastle, a safe and fully functioning workplace remains a key part of day-to-d...

Choosing The Right Bin Hire Solution For Hassle-Free Waste Management

When it comes to managing waste efficiently, finding the right solution can save both time and eff...

Why Cleanliness Is Critical In Childcare Environments

Children explore the world with curiosity, often touching surfaces, sharing toys, and interacting ...

What to Look for in a Reliable Australian Engineering Partner

Choosing an engineering partner is rarely just about technical capability. Most businesses can fin...

How to Choose a Funeral Home That Supports Families with Care

Choosing a funeral home is rarely something families do under ideal circumstances. It often happen...

Why Premium Coffee Matters in Modern Hospitality Venues

In hospitality, details shape perception long before a guest consciously evaluates them.  Lightin...