15 February ATT: Mr Ross Woodward, Chief Executive, Division of Local Government

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1 15 February 2012 ATT: Mr Ross Woodward, Chief Executive, Division of Local Government Division of Local Government, Destination 2036 Review 5 O Keefe Avenue NOWRA NSW 2541 By dlg@dlg.nsw.gov.au Dear Mr Woodward, The NSW Business Chamber (NSWBC) welcomes the opportunity to comment on the Destination 2036 Draft Action Plan. These comments follow the Chamber s initial submission to the Destination 2036 review. While the NSWBC supports the broad strategic directions set out within the Action Plan of efficient and effective service delivery, quality governance, financial sustainability, appropriate structures and strengthening relationships, the initiatives and key activities to try and achieve those directions are simply not ambitious enough to revitalise a sector in desperate need of reform. The promotion of resource sharing between councils, the development of new structural models and the exploration of new operational frameworks to gain efficiencies are all part of the reform matrix for local government in this state. However, based on past attempts to implement such measures by state governments, they simply won t work without bold root and branch reform of local councils in metropolitan Sydney. Sydney increasingly competes for business on a global stage. The archaic local governance structure which maintains 41 councils within the metropolitan area fails to reflect modern Sydney and holds Sydney back from effectively planning and growing for the future. Steps to reduce the number of councils within metropolitan Sydney must be implemented immediately with a renewed focus on metropolitan goals and strategies and the service delivery needs of local businesses and the community rather than the wants of existing councils. Accordingly, the NSWBC strongly objects to the Action Plan s proposal to refer the exploration of council amalgamations to the Local Government and Shires Association (LGSA). Under this initiative, the LGSA would identify the barriers and incentives to encourage the voluntary amalgamation or boundary adjustment of councils. Accordingly, the NSWBC strongly objects to the Action Plan s proposal to refer the exploration of council amalgamations to the Local Government and Shires Association (LGSA). Under this initiative, the LGSA would identify the barriers and incentives to encourage the voluntary amalgamation or boundary adjustment of councils.

2 - 2 - As the Draft Action Plan identifies, in the last 13 years, there have only been four councils that have initiated amalgamations. Purely and simply, the vested interests of councillors and council executives in maintaining the status quo have proven too strong for any significant structural reform of councils to occur in NSW in the last 20 years. If, as the Action Plan suggests, consideration of the amalgamation process is left solely to councils, local government reform in NSW will continue at a glacial pace with businesses and the community suffering as a result of the vested interests of councillors and staff. This is despite the fact that many in the community are supportive of merging councils, especially those within the Sydney region. Indeed, recent research undertaken by Auspoll for the Property Council of Australia has identified that 62% supported merging the 41 Sydney councils to 20 or less 1. The consistent policy of successive state Governments has been for a process of voluntary council amalgamations. This term is however misleading. The word voluntary is used in this instance to try and connote a sense that the community is involved in the decision making process of amalgamations. However, this is a misnomer as it has only been councils themselves who have been involved in considering these matters. As a result many sensible proposals, supported by the community, have been stymied by the self-serving political interests of existing councillors 2. It is the NSWBC s strong view that while councils need to play a role in discussing how reform is undertaken in the sector, they should not be determining whether reform should occur as has been the case with Government support of voluntary amalgamations. With the Government s priority under the NSW 2021 Plan to Involve the community in decision making on government policy, services and projects 3 there should be a re-calibration of the debate on council amalgamations to focus on what local communities want from local government. As was stated in our initial submission, in the Sydney metropolitan area, the maintenance of 41 councils and their associated regulatory regimes (which are varied and inconsistent) present real barriers to business growth for NSW. Local differences in regulation can make compliance for business unduly complex and costly. For the Sydney basin, local can mean councils trying to reflect the views of anywhere between 14,000 to 300,000 residents 4. For business and the broader community, the boundaries imposed by local government are both archaic and arbitrary. 1 Auspoll, Homeowner attitudes to local councils, the planning process and NSW Joint Regional Planning Panels Research Report prepared for the Property Council of Australia 12 October For example there has been a strong push within the Wyong and Gosford communities for the amalgamation of their two councils. However, due to a lack of political will on behalf of the councillors to move the proposal forward, it is now at an impasse with Wyong councillors refusing to explore the issue further see: 3 See Goal 32 NSW 2021 A Plan to Make NSW Number One 4 Population of The Council of the Municipality of Hunters Hill (14,467) and Blacktown City Council (299,797) source ABS Population Statistics

3 A sensible reduction of the 41 councils in the Sydney metropolitan area would ensure that land use planning requirements are applied in a consistent and strategic manner across the metropolitan area. Amalgamation would also help to improve the financial viability of councils in the longer term, as councils would no longer be individually reliant on income derived from business and development growth. Amalgamation would also provide councils with a sufficient rates base to fund local services and infrastructure. The Government, in its NSW 2021 plan has put forward a strong agenda to reinvest, revitalise and grow NSW. The Government plans to achieve this by developing new infrastructure, making more land available for housing and jobs and improving the quality of urban and rural roads. With Sydney s metropolitan governance structure a fractured patchwork of 41 councils however, it s hard to see how the government will be able to implement these priorities without a strong, strategically focussed local government sector partnering their delivery. As noted by the Australian Centre of Excellence for Local Government; The process of consolidation can generate a focus that transcends individual local government boundaries and encourages councils to operate in a broader context one that is more regional or system-wide and enables them to relate more effectively to central governments 5. Reform of local government needs to be seen in this context. Sydney is Australia s only global city. It desperately needs its councils to be focussed on strategic long term outcomes that can positively impact beyond local boundaries. With projections that Sydney will grow to a population of 6 million by , greater strategic alignment between metropolitan and state governance structures is absolutely vital to managing this growth. The NSWBC accepts that better metropolitan governance means more than just local government amalgamations; it means better engagement and alignment between state agencies and local government. However engagement between the tiers of government cannot occur in any meaningful way while we continue to have 41 talking heads representing local interests within the Sydney metropolitan area. This ongoing failure to reform local government has resulted in piecemeal policy development and the ongoing dilution of local government powers, particularly in relation to planning and development decisions, to state government. A discussion about returning these powers to local councils however simply cannot occur until the issue of consolidating councils in metropolitan Sydney is dealt with and local government is demonstrably capable of taking a strategic view of the issues involved. While the NSWBC's preferred position remains that the Government itself should initiate the creation of 10 councils within the Sydney metropolitan region, this submission will detail how the Government can directly engage with the community on the issue of council boundaries to -3-5 Australian Centre of Excellence for Local Government, Consolidation in Local Government: A Fresh Look p.10 6 Planning NSW, NSW State and Regional Population Projections

4 overcome the political impasse that has been created by requiring councils to initiate amalgamations themselves. -4- Power to the people a plebiscite for local government reform To overcome the reform blockage and to make amalgamations truly voluntary, the NSWBC proposes that at the 2012 local government elections, a plebiscite for electors in the Sydney region and Central Coast be developed to gauge community support for council mergers. The first step in this process would be for the Minister to convene an independent working group in order to determine appropriate council boundaries across the metropolitan area. In the absence of any other strategic grouping of councils having been put forward by the NSW Government, the NSWBC would support utilising the ten local government areas set out in the Metropolitan Strategy as a starting point for this discussion. These metropolitan regions could then be overlayed with other non-government regional groupings (such as ROC s) to consider size and shape as well as looking at industrial, educational and cultural clusters to judge their appropriateness for consolidation. For example, a boundary forming the City of St George taking in the LGA s of Hurstville, Rockdale and Kogarah would reflect the cultural linkage between these communities. Similarly, the City of Macquarie taking in the LGA s of Ryde, Hunters Hill, together with parts of Lane Cove and Willoughby would build on the educational and industry linkages within these areas. Initial discussions about how local representation might work in an amalgamated council could also be undertaken at this stage. The structure of the amalgamated Auckland council where a model of community boards taking the place of the former councils would be an appropriate starting point for this discussion but would, obviously, be dealt with in more detail following the plebiscite. Once these boundaries are determined, the independent working group would then provide a short report to the Minister suggesting which LGA s should be grouped, either in whole or in part, together. The Minister could use this report as a proposal as defined under the Act 7 to consider the consolidation of these boundaries further. On receiving the report, the Minister could then refer the examination of it to the Director General as envisaged under section 218 (F) of the Act. Section 263 of the Act provides the matters which the Director General, in undertaking such a review is to take into account and includes considering: the attitude of the residents and ratepayers of the areas concerned 8 7 The Act does define a proposal but does not prescribe the form in which a proposal should be prepared or provided: (a) a proposal made under section 215 to constitute one or more areas, or (b) a proposal made under section 218E to amalgamate one or more areas, or (c) a proposal made under section 218E to alter the boundaries of one of more areas. The NSWBC contends that a short report prepared by an independent working would satisfy the definition under the Act. 8 Section 263 of the Act provides that: (3) When considering any matter referred to it that relates to the boundaries of areas or the areas of operations of county councils, the Boundaries Commission is required to have regard to the following factors: (a) the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned,

5 -5- The most appropriate way to judge the attitude of residents and ratepayers to a proposal is to undertake a poll of electors in the area affected. The Act provides a process for councils to undertake both polls and constitutional referenda 9. In addition Section 218F(5) of the Act provides; Part 3 of Chapter 4 applies to a formal poll taken by the Boundaries Commission or Director- General in the same way as it applies to a council poll referred to in that Part Accordingly, the Director General in examining a boundaries proposal, can undertake a formal poll, in the same way in which a council would undertake such a poll under the Act. As a matter of policy, the Division of Local Government has consistently encouraged councils to undertake polls and constitutional referenda at the same time of council elections. Holding a poll at such a time ensures the greatest number of participants in the decision making process and helps reduce the cost of undertaking the poll 10. Accordingly, it would be appropriate that the Director General, acting within the power accorded under s.218f(5) place a poll with the ballot papers for the next local government elections in September Following the elections, the Director General could consider the results and the other matters set out under s.263 as well as be directed to consider the wider questions of the strategic and metropolitan planning implications for supporting / not supporting a boundary adjustment as well as how amalgamation would assist in dealing with sectoral wide issues such as skills shortages in planning (land use and strategic), executive staffing and asset management. The Director General could then make recommendations to the Minister on whether or not which areas should be amalgamated. The Minister on receiving such a recommendation could rely on the outcome of the plebiscite as a mandate for the amalgamations to occur. This process would see councils, where an amalgamation is supported, able to maintain their current structure in the lead up to elections in Work however would be ongoing over this period in preparation of working as a single council after the next election. (b) the community of interest and geographic cohesion in the existing areas and in any proposed new area, (c) the existing historical and traditional values in the existing areas and the impact of change on them, (d) the attitude of the residents and ratepayers of the areas concerned, (e) 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 representatives and ratepayers and residents and such other matters as it considers relevant in relation to the past and future patterns of elected representation for that area, (e1) the impact of any relevant proposal on the ability of the councils of the areas concerned to provide adequate, equitable and appropriate services and facilities, (e2) the impact of any relevant proposal on the employment of the staff by the councils of the areas concerned, (e3) the impact of any relevant proposal on rural communities in the areas concerned, (e4) in the case of a proposal for the amalgamation of two or more areas, the desirability (or otherwise) of dividing the resulting area or areas into wards, (e5) in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented, (f) such other factors as it considers relevant to the provision of efficient and effective local government in the existing and proposed new areas. 9 See Part 3, Chapter 4 which provides: A council may take a poll of electors for its information and guidance on any matter. 10 See

6 -6- It should be noted that where an amalgamation is supported, there would be no change in individual council s rating structures until after local government elections in After this time, rates would move into a single, unified system. What form could the plebiscite take? As discussed above, an independent working group should be tasked with looking at the appropriate councils to be grouped together within metropolitan Sydney. Once this has been determined, an appropriate plebiscite question could then be formulated. If the councils identified in the metropolitan strategy s North East region (Pittwater, Warringah, Manly) were identified as an appropriate grouping, the plebiscite question could take the form of: Do you support reviewing the boundaries of Pittwater, Warringah and Manly local government areas? What about councils outside of metropolitan Sydney? As noted above, the NSWBC is strongly supportive of the amalgamation of councils within the Sydney basin (and central coast). In the context of rural / regional councils however, there may be a different approach whereby Regional Organisations of Councils (ROCs) are empowered to more ably assist in the delivery of services as well as councils regulatory functions and planning for infrastructure development. Accordingly, a standardised plebiscite on the amalgamation of councils in regional areas is not supported by the NSWBC at this time. With a separated regional entity, providing economies of scale and with a coordinated regional approach to infrastructure planning, it is NSWBC s view that rural councils will be in a much better position to meet the needs of businesses which already operate, or those who wish to operate outside of metropolitan NSW. What does this mean for metropolitan governance improvements? The NSWBC accepts that reform of local government in NSW is about more than consolidating council boundaries. Improvements to the governance of councils, as contemplated by the Destination 2036 Review, needs however to be coupled with real structural reform of councils. You simply cannot have one without the other. The challenges of maintaining the current number of councils within Sydney are manifold. Competing local leadership; complex interrelationships between councils and government agencies; duplication of functions in planning / regulation / and infrastructure services; inadequate funding; significant skills shortages (in planning and asset management); and local infrastructure backlogs are just some of the problems facing Sydney as it attempts to compete on a national and increasingly a global stage. Without a clear statement on the structural reform of councils in the metropolitan area, governance improvements such as moving to full time mayors and councillors and increasing the role and responsibilities of councils simply cannot be supported or indeed contemplated by the NSWBC at this stage.

7 -7- Conclusion The Destination 2036 review presents a significant opportunity to reform, in a positive way, the roles, responsibilities and structure of local government in NSW. However if this reform is to be realised, a clear process for the amalgamation of councils needs to developed at the outset. This process needs to involve the community, including local businesses in a meaningful way. Absent the political will by the Government to take on this process directly, a plebiscite to canvass the views of the community on this issue would be an appropriate mechanism to achieve this. Please contact Luke Aitken of the NSW Business Chamber s Policy unit via at luke.aitken@nswbc.com.au or on phone should you have any queries about this submission. Yours sincerely Paul Orton Director, Policy & Advocacy