For the past two years or more, the senior staff of our Council have been diverted from their normal task of servicing the needs of the Great Lakes Community. Driven by the State Government, we've had key Council staff and councillors pre-occupied with the TCorp review, the Fit for the Future process, then, for the past 18 months, the on and off and on-again saga of prospective mergers.
Now, a little bit of navel-gazing from time-to-time can be productive. It can sharpen the focus and clear the fluff. But when it persists month after month, year on year, this pre-occupation becomes counterproductive.
It has been, for two years past, a massive distraction for Council from its core functions. The consequent loss of productivity is just one of the hidden costs of the current round of council mergers across the state.
Now, if there were massive nett savings to be realised from a merger, who wouldn't support one? We would grudgingly wear the short-term pain if we knew that our rate increases would be meaningfully smaller or the service levels recognisably higher. But the evidence based on the business case, produced for Government, suggests the opposite.
Lets have a quick look at what the business case suggests and add to that a dose of reality.
30m / 20 = 1.5m
The estimated savings claimed from the merger are $30million over 20 years which averages $1.5million per year.
1.5m / 150m = 1%
Those savings are on an annual turnover of the merged council of $155million and up. So the annual savings are less than 1%; potentially that is just noise in a budget of this size. And it assumes that there are no inefficiencies or other hidden costs resulting from the merger.
30m + 20m = 50m
Of course the business case points out that the government will toss in an extra $20million to sweeten the deal. It adds that to the $30million claimed savings and asserts that Council will be $50million better off! This obviously assumes that the $20million won't be needed to cover the costs of amalgamation. I suspect that the real costs of amalgamation will be much higher than that.
30m - 20m = 10m
There is another way of looking at this. The State Government is saying that it will invest $20 million of public money in the merged Council in the hope of making savings for the public of $30million over 20 years. Effectively a $10million "profit" on the $20million outlay. If that $20million was invested at 2% for 20 years it would give a similar return with a whole lot less stress.
However you look at it, the claimed savings are not huge. But on the other side of the ledger there are some significant visible and hidden costs many of which have not been addressed.
The State Government has placed a large number of constraints on merging councils such as:
- Merging councils can't receive any Special Rate Variation.
- Rating structures would be frozen for four years.
- There would be no forced staff redundancies for three years.
- Staffing numbers in small centres (such as Tea Gardens and Gloucester) cannot be reduced.
- And already, positions which are falling vacant are being left empty.
These constraints will have undesirable effects on the ability of the merged Council to deliver services efficiently or to address backlogs. They will exacerbate inequities between former council areas regarding rating levels and levels of service. They will produce structural dissonance where the staff skills available are badly aligned to what is needed and where it is needed.
The cost of merging disparate administrative systems is often underestimated. There will need to be a lengthy data cleansing exercise before integration or the resulting database will be of dubious value. Agreements on new definitions, procedures, and policies will take time to establish and implement. This consolidation process is likely to take several years during which the new Council will again be distracted from its core function of serving the community.
The senior staff will be higher paid, reflective of the large size of the new council - but they will need to spend much more of their valuable time in travel than senior staff do now. Councillors and ratepayers will spend more time on the road too with the time loss and risk that accompanies that.
For the ratepayers of the current Great Lakes, significant portions of their rates will be diverted to make up for major deficiencies in Greater Taree and Gloucester. Projects of key interest to us in the Cove such as drainage and roadworks are likely to slip down low on the new Council's priority list.
In North Arm Cove we have had our disagreements with Great Lakes Council. But we have worked with them over the years to build up a constructive working relationship. We sit down with the General Manager, senior staff, and councillors to work through our local concerns. We have regular contact with the directors.
In a merged council our village can expect to get probably less than a third of that attention. The current carefully cultivated relationships will be severed and we will face a struggle to build new relationships in the face of competition for attention from towns and villages with different needs and far distant from us.
The $20million sweetener offered does not go far towards addressing the true costs of amalgamation and the well over $100million maintenance backlog that will face the merged council. Plus some of the hidden costs of the merger will fall directly on ratepayers.
It is hard to find any justification for this proposed three-way merger but, despite lack of a believable rationale and even in the face of overwhelming opposition, it may still go ahead.
