Council Meeting 17 November 2015
TRIM REFERENCE: 2015/3068
That in response to the NSW Government’s Fit for the Future program and the findings of IPART, Orange City Council:
1 Agree to a merger with Blayney Council and Cabonne Council.
2 Agree to a merger with Blayney Council, as next preference.
3 Agree to a merger with Cabonne Council, as next preference.
4 In the event of a merger with Blayney and Cabonne Councils or either Blayney Council or Cabonne Council singularly that it be recommended to the newly merged Council that it seek sensible boundary changes over the areas of the current Local Government Areas of Cabonne, Blayney and Orange.
5 It be acknowledged that Council has resolved its position relying upon the published financial and asset information of the merger partners as there was no option for thorough checking under the Fit for the Future program. It also be acknowledged that Orange City Council made submission to the NSW Government in this regard advising of concerns.
6 Request that if Transition Committees are appointed that the Committees are advisory and are structurally and operationally fair.
7 Request the NSW Government:
a Confirm the availability of the Stronger Communities Fund and Merger Implementation Grant for a three council merger, provided the merger is a voluntary one supported by at least two of the merger partners.
b Raise the level of funding available to cover merger implementation costs up to $10 million, the same level as metropolitan councils.
c Raise the level of the Stronger Communities Fund to up to $15 million, the same level as metropolitan councils.
8 Provide the following summary in the 50 word summary section of the prescribed form to be submitted to the NSW Government:
· Preferences as above
· Council would consider a larger footprint also if State Government wishes
· requests if Transition Committees happen that they be advisory and structurally/operationally fair
· requests incentive/transition monies be provided if a merger occurs with a majority of willing partners
· relies on published financial/asset information of merger partners.
As outlined in the staff reports in the business paper of 17 November 2015, Council is required to provide a response to the IPART findings in relation to Council’s Fitness for the Future.
This is the end point to the lengthy review process that started a few years ago with Destination 2036 followed by the Independent Local Government Review, the latter of which recommended that Orange merge with Cabonne and/or Blayney.
Council has made numerous submissions and undertaken numerous evaluations in the process including, amongst other things, a positive TCorp review and a merger evaluation with Cabonne that found limited savings after a ten year period.
The Treasury Corp review found Orange had a “Sound” Financial Sustainability Rating. Of the 152 Councils in NSW, only 22.4 per cent were given a rating of sound or above.
TCorp found that Orange Council had a “Negative” outlook on the basis of some incomplete asset information. Council has since completed the asset information and has a sustainable funding mix for its assets as demonstrated in the 10 year plan. Of the 152 Councils in NSW 48 per cent were given a negative outlook, 48.7 per cent neutral and 3.3 per cent positive.
Council’s submission to Independent Local Government Review Panel identified that Council met and exceeded the criteria for a fit Council over its 10 year plan.
Nonetheless, the IPART review found that Orange City Council was unfit as Council failed IPART’s view of the scale and capacity measure as it did not demonstrate the standalone position was equal to or better than the position recommended by the Independent Local Government Panel (ILGP) for Orange and Cabonne to merge.
The assessment that Council is “unfit” because it hasn’t proposed a merger has significant future implications including being denied access to processes and funding opportunities that the NSW Government is including in the ongoing reform processes outside the Fit for Future reform process. This includes access to reduced interest financing programs, priority funding/grant schemes, regional planning, infrastructure and simplified processes.
Cabonne and Blayney were found unfit also.
The NSW Government has made it clear that its funding package for merging councils will only be available to councils that agree to merge.
The merger package announced is as follows:
· Stronger Communities Fund of $5m for two councils or $10m if three or more councils merge for community infrastructure projects
· Merger costs funding of $5m.
Additionally the NSW Government is proposing involvement for Councillor input for those involved in agreed mergers.
A letter from Minister for Local Government the Hon Paul Toole stated:
“Councillors that have demonstrated an ability to work together in reaching agreement to merge will have the opportunity to shape the future of the new council and serve the community until the end of the current term. This will include input to decisions on service levels, branding, jobs, location of key administrative centres and/or local representation.”
Blayney Council resolved:
1 That having regard to the finding by IPART that Council is ”Not Fit” due to a lack of scale and capacity:
a) Council is willing to enter into a merger with neighbouring councils, provided all councils are meaningfully involved in planning and implementing the merger, that local representation is fairly provided for and that the future of smaller towns and villages is protected;
b) having regard to existing linkages, and consistent with the recommendation of the Independent Local Government Review Panel, the most appropriate region for the Shire to be part of is one covering the existing LGAs of Orange, Cabonne and Blayney;
c) it is not in the interests of Blayney Shire residents to be part of a merger with Orange City alone; and
d) in these circumstances, Council nominate the preferred merger partners Cabonne Council and Orange City Council as its first and only preference.
2 That Council urge the government to:
a) confirm the availability of the Stronger Communities Fund and Merger Implementation Grant for a 3 council merger, provided the merger is a voluntary one supported by at least 2 of the merger partners;
b) raise the level of funding available to cover merger implementation costs to up to $10 million, the same level as metropolitan councils; and
c) raise the level of the Stronger Communities Fund to up to $15 million, the same level as metropolitan councils. (Ferguson/Somervaille)
Cabonne Council has resolved that Council:
a) Note the report; and
b) Include the following 50 words in its response to the IPART findings:-
“Cabonne is one of the most financially sustainable councils in NSW. It’s a specialist rural/small town based council. Over 90% of its residents do not want to amalgamate, particularly with Orange City. Cabonne is financially superior and has greater current and/or future population than two neighbours deemed ‘fit’.
All of the above has led to the point where Orange City Council is to provide a response on mergers to the NSW Government. Clearly there is a strong carrot and stick approach with the State Government obviously keen to see Councils take up mergers.
Council has a very different view to IPART on Fitness for the Future, given that it exceeded all financial, infrastructure and sustainability measures while other Council’s needed to put in additional rate rises to be deemed fit and others which did not meet all financial criteria were deemed fit.
Clearly the State has a view of a regional local government footprint around Orange for the future.
The State has identified benefits for such a merger including:
· Access to funding
· A regional force
· Deemed fit
· Broader footprint for regional planning and inter-government partnerships
· If mergers are to proceed, a seat at the table
· Enhanced opportunity to build on regional collaboration
In relation to the recommendation for this Mayoral Minute I have attempted to include the position discussed with Blayney Council with my fellow Councillors (albeit not unanimous) and that outlined in the ILGRP report in points 1 to 3 of the recommendation.
I have included the positon consistently raised by Orange City Councillors in discussion, in staff reports and briefings in relation to points 4 and 5 of the recommendation regarding boundary changes and risks associated with relying upon published financial and asset information as opposed to a thorough due diligence assessment for a merger.
A question arose regarding fiduciary responsibility and due diligence in relation to Council providing a response to the NSW Government given concerns regarding the reliance on published financial and asset data at the most recent Councillor briefing with feedback provided by staff. I have attached a memo from the General Manager confirming advice provided to the briefing.
In point 6 with respect to Transition Committees, I am referring to the possibility of a Transition Committee made up of representatives of the merging councils, to advise on the design, structure and other fundamental elements of the newly merged Council, where there are both multiple partners (in this case 3) and the need to ensure fairness and equity to the ratepayers of the respective merging Councils.
By way of background the ILGRP suggested Transitional Committees and more recently both the Premier and the Minister for Local Government have alluded to a role for Transitional Committees and Councillors in their letter to Councils dated 11 November 2015, a copy of which has been circulated previously and also attached to this report.
Overall I have taken input from Councillors, State Government, staff, stakeholders and numerous parties into consideration with my own thoughts and put forward a recommendation that deals with the future shape of a regional Council, appropriate in contemporary circumstances.
1 Mayoral correspondence - clarification of issues - Fit for the Future reforms, IC15/17193⇩