SCENARIO ANALYSIS: OPTIONS FOR OBERON LGA AN ASSESSMENT OF POTENTIAL STRUCTURAL REFORM OPTIONS PUBLIC MEETING: 9 NOVEMBER 2015 Nicole Campbell, Program Manager UTS:CLG
WHAT THIS PRESENTATION COVERS Local Government in NSW Overview of Local Government Reform – Destination 2036 – TCorp assessment of councils’ financial sustainability – Independent Local Government Review Panel (ILGRP) – Local Government Act Review Taskforce Government response to review processes – Fit for the Future (FFF) Independent Pricing and Regulatory Tribunal (IPART) assessment of FFF proposals – Process – Summary of assessment process IPART Assessment of Oberon Potential options – scenario analysis (modelling scale and efficiency) – Oberon “stand-alone” – member of Central West Joint Organisation – Oberon merge with Bathurst Regional Council – Oberon merge with Upper Lachlan Shire Council – Oberon merge with Lithgow Council Other considerations: Financial Assistance Grants; Governance; Caveats
LOCAL GOVERNMENT IN NSW In NSW there are over 1500 Councillors in 152 Councils Local Government in NSW employs over 50,000 people, has an asset and infrastructure base of $89b and spends more than $9.4 billion/year Council services include: town planning, waste management, community development, environmental protection, economic development and much more… Councils are elected for fixed 4 year terms – the next LG election in NSW is scheduled for September 2016
RECENT REFORM PROCESSES IN NSW LOCAL GOVERNMENT 2011-2012: Destinations 2036 2011-2013: TCorp Assessment 2012-2013: LG Act Taskforce
2012-2013 ILGRP: FINAL REPORT Final Report: 65 recommendations: http://www.localgovernmentreview.nsw.gov.au/documents/LGR/Revitalising%20Local%20Govern ment%20-%20ILGRP%20Final%20Report%20-%20October%202013.pdf
ILGRP: ESSENTIAL ELEMENTS OF AN EFFECTIVE SYSTEM OF LOCAL GOVERNMENT Councils with the scale , resources and ‘strategic capacity’ to govern effectively and to provide a strong voice for their communities Maintenance of a strong sense of local identity and place Councils with an adequate revenue base (own source or grants) relative to their functions, healthy balance sheets, and sound financial management Councils renowned for their efficiency and focus on outcomes, based on the Integrated Planning and Reporting framework Regional groupings of councils that share resources on a large scale and jointly plan and advocate for their regions Councils that have highly skilled mayors, councillors and executive teams ; and are respected by the State government and community alike Mayors who are recognised leaders both within the council and throughout the local community, and enjoy a positive reputation for that leadership. (Source: ‘Final Report’ ILGRP, Box 7, p. 31)
ILGRP: ESSENTIAL ELEMENTS OF AN EFFECTIVE SYSTEM OF LOCAL GOVERNMENT An electoral system designed to ensure that as far as possible councils are representative of the make-up and varied interests of their communities A Local Government Act that minimises prescription and provides a range of options for the way councils and regional bodies are structured Effective mechanisms for State-local consultation, joint planning, policy development and operational partnerships A local government association that is focused on strategy; a well- informed, dynamic advocate; a leader in reform ; and a troubleshooter A constructive relationship between employers, employees and employee organisations, focused on improving productivity , performance and rewards . (Source: Final Report ILGRP, Box 7, pg 31)
ILGRP: DEFINING “STRATEGIC CAPACITY” 1. More robust revenue base and increased discretionary spending 2. Scope to undertake new functions and major projects 3. Ability to employ wider range of skilled staff 4. Knowledge, creativity and innovation 5. Advanced skills in strategic planning and policy development 6. Effective regional collaboration 7. Credibility for more effective advocacy 8. Capable partner for State and federal agencies 9. Resources to cope with complex and unexpected change 10. High quality political and managerial leadership. (Source: ILGRP, Box 8, pg 32)
ILGRP RECOMMENDATIONS 65 recommendations covering: – Fiscal responsibility – Strengthening the revenue base – Meeting infrastructure needs – Reform of Grants – provided on the basis of greatest need (Federal legislative change needed) – Improvement, productivity and accountability – Political leadership and good governance – Advance structural reform – Regional Joint Organisations – Rural Councils and Community Boards – Progressive referral of non-metropolitan councils to reconstituted Boundaries Commission (for merger and boundary changes) – State-Local Government Relations ILGRP recommendation for Oberon: Council in Central West Joint Organisation or merge with Bathurst Regional Council ( Source : Final Report ILGRP, p. 116).
FIT FOR THE FUTURE NSW Government response to ILGRP and LG Act Taskforce released 24 September 2014 – ‘Fit for the Future’ (FFF) “A Fit for the Future council is one that is: Sustainable; Efficient; Effectively manages infrastructure and delivers services for communities; Has the scale and capacity to engage effectively across community, industry and government.” (Source: FFF, pg6, September 2014) http://www.fitforthefuture.nsw.gov.au/sites/fftf/files/NSW- Government-Response-Panel-and-Taskforce- recommendations.pdf
TIMELINE: FFF ASSESSMENTS Independent Pricing + Regulatory Tribunal (IPART) appointed by NSW Government in April 2015 to assess FFF proposals. IPART sought public feedback on the proposed methodology on 27 April 2015 . IPART methodology released on 5 June 2015 http://www.ipart.nsw.gov.au/Home/Industries/Local_Govt/Fit_for_the_Future NSW councils required to submit FFF proposals to NSW Govt by 30 June 2015 IPART conduct FFF assessment of councils – provision of report to NSW Government on 16 October 2015 http://www.ipart.nsw.gov.au/Home/Industries/Local_Govt/Fit_for_the_Future
IPART FFF METHODOLOGY IPART applied criteria established by the NSW Government via the ILGRP to assess a council as being ‘Fit for the Future’ Scale and capacity to engage effectively across community, industry and governments – threshold criterion – based on projected 2031 populations. Financial sustainability – assessed on: – Sustainability – Effectively managing infrastructure and delivering services for communities – Efficiency*
SUMMARY: IPART “FFF” ASSESSMENT 139 proposals received from 144 councils including – 4 merger proposals (involving nine councils) – 115 Council Improvement Proposals – 20 Rural Council proposals IPART Assessment: 87 proposals assessed as “Not Fit” (63% of proposals) – 60 demonstrated financial sustainability but not ‘sufficient scale and capacity’ – 18 demonstrated sufficient ‘scale and capacity’ but not financial sustainability – 9 councils did not demonstrate either financial sustainability or scale and capacity 52 proposals assessed as “Fit for the Future” (37% of proposals) – All four merger proposals assessed as “Fit”
IPART ASSESSMENT: NON-METRO
IPART ASSESSMENT OF OBERON Parameter Current Projected Area (km 2 ) 3,594 3,594 Population 5,200 (2011) 4,950 (2031) Operating revenue $12.0M TCorp assessment Sound Negative outlook Scale and capacity Does not satisfy on population projections Financial criteria Satisfies overall • Sustainability Satisfies • Infrastructure and Satisfies service management • Efficiency Satisfies Water and sewage Meets NSW Govt best practice requirements Social and community Closer links with Blue Mountains than other western towns context Community consultation Undertaken in April 2015: support for stand alone council Submissions received 7: Six opposing merger; one neutral
NSW GOVT RESPONSE TO IPART REPORT Released on 20 October 2015 http://www.fitforthefuture.nsw.gov.au/whats-on-offer-for-councils Councils given until 18 November 2015 to respond to the assessment of their council and identify merger preferences Stronger Communities Fund and Merger Implementation Grant: Fund Metro Sydney* Regional Stronger Communities $10 million $5 million Fund (community or or $10 million if three or infrastructure for merged $15 million if three or more more councils merging entities) councils merging Merger Implementation $10 million $5 million Grant TCorp Low Interest Loans Oberon has taken advantage of $5m in last 2 years *Includes Newcastle, Wollongong and surrounds NSW Government decision on local government reforms expected before the end of 2015 .
2015: GPSC #6: UPPER HOUSE INQUIRY INTO LOCAL GOVERNMENT http://www.parliament.nsw.gov.au/prod/parlment/committee.nsf/0/B0C026787382E495CA257E EC007FFECA?open&refnavid=CO3_1
POTENTIAL MERGER OPTIONS: OBERON Oberon as a ‘stand alone’ council – part of Central West Joint Organisation Oberon merging with Bathurst Regional Council Oberon merging with Upper Lachlan Shire Council Oberon merging with Lithgow Council
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