The Reform Commission presents its case for forced amalgamation in Chapters 3 and 4 of its Report of the Local Government Reform Commission (State of Queensland (Local Government Reform Commission)) (2007).
Discussion in Chapter 3 is organized under six main headings: ‘analysis’; local government capacity; ‘social, economic and environmental factors’; ‘community of interest’; ‘financial sustainability’; and ‘boundaries’. Under the analysis heading, the Commission simply lists its objectives as set out in its Terms of Reference and outlines the ‘range of data sources’ (p.37) it employed. The latter is significant in the sense that no material is specified dealing with local government reform elsewhere in Australia or indeed abroad. This sets the tone for a highly ‘Queensland-centric’ mode of analysis.
The remaining five headings deal with what we can call ‘substantive’ criteria. The first substantive criterion invoked by the Commission consists of ‘the capacity of local government to deliver services, undertake planning and exercise sound governance’ (p.38). In so doing, the Commission sought to assess how structural reform through amalgamation ‘would improve local government’s ability to deliver services, undertake environmental, social and economic planning, and provide local government with the capacity to better manage risk’ (p.38). The Commission found local councils throughout Queensland are presently ‘struggling’ to meet the demands placed on them and battling to compete for scarce administrative and technical skills in a highly competitive labour market. From this diagnosis, the Commission concluded that ‘stronger more robust local governments’ will better be able to overcome these challenges.
The analysis of local government capacity goes on to consider ‘structural barriers’ that ‘impede’ service provision and effective growth management and development planning. Six illustrative examples are provided: (i) Population growth in areas that cross local council borders should be ‘managed on a regional basis’, such as the Sunshine Coast; (ii) the existence of ‘multiple’ local council planning systems raises the ‘complexity’ of managing regional development, like the Darling Downs; (iii) current boundaries that create ‘artificial’ barriers between communities, such as boundaries that divide single residential areas; (iv) ‘duplication’, and ‘complexity’, such as Townsville/Thuringowa; (v) numerous small councils in a ‘compact’ spatial zone that cannot ‘capture and manage’ economic development, like North Burnett; and (vi) ‘donut’ councils that ‘impede optimal service delivery’.
A discussion of the ‘costs and benefits’ associated with amalgamation ensues, which forms the central thrust of the case for forced mergers in the Commission’s deliberations. In a candid admission, the Commission concedes that ‘it has not attempted to quantify these costs [of amalgamation] in respect of the recommendations it makes’ (p.38), despite acknowledging that significant costs exist. Instead, the Commission was ‘guided’ by the outcomes of previous Queensland local mergers in the 1990s (Cairns, Ipswich, Mackay, Warwick and Cooloola), despite the fact that no formal assessments have ever been made of the consequences of these amalgamations; the Commission argued that ‘in all cases’, these councils have ‘emerged as stronger administrations’ that ‘better represent their communities’. In addition, the Commission relied on SSS appraisals from four councils (Crows Nest/Rosalie and Goondiwindi/Waggamba). These reviews identified costs attendant on mergers that included a decline in Financial Assistance Grants, ‘disruptions’ to service provision during the implementation of amalgamation, and outlays on ‘integrating council systems’. However, these same SSS reviews predicted various benefits to amalgamation, not least (a) a ‘larger resource base’, better infrastructure management and enhanced capacity; (b) scale economies (that are not identified by service type); (c) unquantified and unspecified ‘savings’ that can ‘fill gaps in middle management’ thereby improving operational efficiency; cost savings from asset ‘rationalisation’; and (d) ‘better planning and infrastructure delivery across growth areas’ (p.39).
From this limited evidence drawn exclusively from Queensland, the Commission felt able to generalize the benefits of structural reform into main four categories: (a) economies of scale; (b) more efficient infrastructure delivery; (c) more skilled staff; and (d) improved financial governance and standards implementation. However, the Commission immediately (and perhaps unwittingly) undercuts these assertions by observing that ‘the costs incurred by, and the benefits which accrue to amalgamated councils will largely be dependent decisions the new local governments make during the implementation phase’, depending on how these new organizations expend the ‘dividends’ derived from amalgamation. It is important to stress that in its evaluation of the costs and benefits of council mergers, the Commission completely ignores any evidence that may be gleaned from Victoria, South Australia and New South Wales, all of which have undergone structural reform over the past two decades, as well as the wealth of material available from abroad.[6]
The second main criterion applied by the Commission consisted of ‘social, economic and environmental factors’, especially in the context of ‘regional communities of interest’. In particular, the Commission identified six main ‘challenges’ confronting regional Queensland local government over the next 20 years, as follows: (a) Maintaining the viability of communities in Western Queensland; (b) dealing with the transformation of economic activity away from traditional agriculture in Western Queensland; (c) coping with the problems presented by the rapid increase in mineral extraction and its need for infrastructure; (d) growth management in regional centres; (e) managing ‘tree-change’ and ‘sea-change’ migration flows; and (f) growth management in South East Queensland. While none of these factors are addressed further, the Commission simply observed that it ‘has sought to balance the specific (social, economic and environmental) aspirations of local communities’ (presumably as expressed in submissions to the Commission) ‘ with the regional economies it sees emerging over the next 20 to 30 years’ (p. 40). How this was done is left to the imagination of the reader.
The third major criterion resides in ‘community of interest’ as defined in Local Government Regulation 2005, with the proviso that the Commission should try to avoid amalgamating parts of existing areas and instead incorporate whole local government areas together. In its discussion, the Commission went into some detail over the difficulties involved in determining community of interest in practice and noted the ‘passion’ with which people experienced a ‘sense of place’ associated with a current local government area. However, it nonetheless ‘separated the issue of identification with a particular locality, from that of a broader community of interest, apparently on the basis that instances exist in Queensland where ‘distinctive communities continue to thrive within existing local government boundaries’ (p.41). How the Commission has proceeded is not explained.
The fourth main criterion guiding the Commission is ‘financial sustainability’ — the chief motivating force for the amalgamation program according to the DLGPS&R (2007) Local Government Reform: A New Chapter for Local Government in Queensland, which set out the rationale for the whole reform process (Dollery et al. 2007b; LGAQ 2007). It is thus little short of astounding that the Commission ‘has not attempted to define a minimum level of financial sustainability for local government in Queensland’ (p.42). The Commission observed that it relied on the Queensland Treasury Corporation’s (QTC) Financial Sustainability Reviews, which are considered in Chapter 8 of its Final Report, despite the fact that not all councils had undergone QTC scrutiny prior to the Final Report — a matter the Queensland government used to justify abandoning the SSS program!
Two points are relevant in this regard. Firstly, of the 109 councils that had been reviewed by the QTC, 57 councils (52 per cent) were classified as ‘moderate’ in terms of financial sustainability, where moderate implies a ‘high capacity to meet its financial commitments’, and 28 (25.6 per cent) were designated as ‘weak’, where weak means an ‘acceptable capacity to meet its financial commitments’ (p.71). In other words, in the view of the QTC, these two groups of councils were not perceived as financially unsustainable! Secondly, the definition of financial sustainability in the Australian local government milieu has not only proved to be elusive, as attested by the state-based inquiries in South Australia, New South Wales, Western Australian and Tasmania cited earlier in this paper (see Dollery and Crase 2006), but also too narrow (Dollery et al. 2006a). The Commission seems to have overlooked these definitional difficulties altogether as a consequence of its exclusive use of Queensland literature.
The fifth and final criterion consists of local government boundary considerations to which we have already alluded. The Commission felt bound by its Terms of Reference to make recommendations for amalgamation that involved only whole local government areas rather than parts of local government areas.
A feature of contemporary debate over structural reform in Australian local government is the emphasis placed on alternative models of local government that can be implemented instead of amalgamation in any process of structural reform. For example, the LGAQ (2005, p.15) has composed a taxonomy that distinguishes between four conceptual models: ‘Merger/amalgamation’; ‘significant boundary change’; ‘resource sharing through service agreements’, in which one local authority will undertake specific functions such as waste management for other councils; and ‘resource sharing thorough joint enterprise’, in which municipalities combine their activities in a given service function in order to reap scale economies, such as official record keeping and storing. Similarly, Dollery and Johnson (2005) have proposed a sevenfold typology comprising existing small councils, ad hoc resource-sharing agreements, Regional Organizations of Councils, area integration or joint board models, the virtual local government model, the agency model and amalgamated councils. These theoretical models have been augmented by a growing literature on applied models of local governance, either in operation or under consideration (see Dollery et al. 2007a).
For this reason, the Queensland Reform Commission no doubt felt obliged to at least consider alternatives to forced amalgamation in its deliberations. Three alternative models are discussed in Chapter 4 of the Final Report: the ‘multi-purpose joint local government’ (MPJLG) model advocated by the LGAQ; shared service models; and regional alliances of local councils. On the basis of its deliberations, the Reform Commission apparently felt able to dismiss these three alternatives out of hand. The Commission concluded that:
While MPJLGs, shared services and alliances have been promoted in suggestions as alternatives to amalgamation, the Commission considers that they are inferior options. All the advantages nominated by advocates of these alternatives can be realized by amalgamated councils, with less bureaucracy and administration, and avoiding the complexity and delays that are an inevitable part of negotiating agreements with multiple councils. These approaches remain valid for use by accountable elected entities which can consider their applicability in addressing particular administrative, service delivery or contracting issues, not as a substitute for structural reform.
This conclusion is noteworthy for two main reasons. Firstly, the Commission did not even attempt to engage with the Australian literature on alternative models of local government, which includes empirical evidence on the actual outcomes of several models already in operation, such as the very successful Riverina Eastern Regional Organisation of Councils in New South Wales (Dollery et al. 2005) and the Walkerville model in South Australia (Dollery and Byrnes 2006), to cite but two examples. Put differently, the Commission is guilty of ‘evidence-free’ policy evaluation. Secondly, most alternatives to amalgamation are premised on the notion of retaining local democracy and local choice while at the same time combining those functions that exhibit significant scale economies, scope economies and other efficiency-enhancing attributes. In other words, the whole thrust of these models is to preserve local autonomy without any trade-offs associated with the size of the organisation. By not even considering local autonomy, local choice, local democracy and local ‘voice’ as a desirable ‘public good’ in its own right, the Commission misses the central objective of these models.