Democratically elected NSW councils sacrificed on the altar of development Part 1

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Jamie C.

On Thursday May 12, the Baird Coalition government dismissed elected councils throughout NSW.

In Sydney, 42 councils were out, and their councillors sacked, and 19 new councils, resulting from mergers, were in, with unelected "administrators" at the helm until elections in September 2017 and a further 6 Sydney councils—Mosman, Hunters Hill, North Sydney, Strathfield, Ku-ring-gai & Botany Bay—would also have administrators but for the fact that they have mounted legal challenges to the administrative takeovers. 

The prelude to this was a program and massive propaganda campaign entitled "Fit for the Future" with its own website and strategic reports, released in September 2014.

The Housing Industry Association (HIA), the only national association for the residential building industry and self-proclaimed as the "voice" of that industry, proclaimed its support for the "Fit for the Future" reform agenda in 2015. 

After the release of the review of this agenda by the Independent Pricing and Regulatory Tribunal (IPART) on the 20th October 2015, the HIA’s media release cited the release as "evidence that it’s time to act on council mergers in NSW".  

And, of course, "Independent" in the IPART name refers to independence from any parliamentary party’s particular position, not independent of capitalist class rule.

Bourgeois democracy—the plaything of the ruling circles
Ted Hill, in "The Labor Party?", discussing the function of political parties, put it concisely: "The ruling circles essentially rely upon force to ensure the maintenance of capitalism with its exploitation and subjection of the workers and working people. But they conceal this force under the cover of democracy." 

The reality is very clear in this case. 

On the 12th November 2015, the then NSW Executive Director of the Property Council of Australia (PCA), Glenn Byrnes, had this to say: "We’re pleased to see councils progressing talks on amalgamations, but the Government will still need to look at forced amalgamations for those acting in defiance of reform" (my emphasis).

What the PCA means by "reform" is change in the interest of developers. One should realise that the PCA is not some isolated minor lobby group overreaching itself. It is a vehicle representing a significant segment of bourgeois rule. The PCA describes itself on its website as "the leading advocate for Australia’s biggest industry—property." 

Property represents one-ninth of Australia’s GDP (the largest of any sector), employs 1.1 million Australians (more than mining & manufacturing combined) and generates $72 billion in tax revenues "to fund community services". 

When the PCA says "Government will still need to look at forced amalgamations", you can be certain that any bourgeois administration will be thankful for the advice and happy to do just that. 

Of course, the concept that the party-in-office forms government is itself somewhat misleading: in reality, it forms an administration to look after the affairs of the bourgeois state including formulating policy and has a public service to implement this policy. 

It tries to make sure that capitalism continues running with the least problems for big business, and to put into effect the demands of big business where it is feasible to do so without unduly causing class struggle to upset the monopoly apple cart. 

This is not to say that the party-in-office administrations are unimportant. On the contrary, they are critical to the day-to-day running of Australia and its states. 

They are servants of capitalism and are responsible for much of the donkey-work that needs to be done, including promoting and arguing publicly for policy. Ministers even take responsibility for strategy as well, and must have a good understanding of issues. 

They take the bouquets when things go right, and the brickbats when things go wrong. 

Nevertheless, with regard to the critical issues facing capitalism in Australia, government—setting the core capitalist policies & demands that the administration subsequently aims to bring into effect—is largely carried on behind the scenes by major corporations and organisations representing big business or specific areas of business, such as the Business Council of Australia (BCA), PCA, HIA, State Business Chambers and their elite sub-organisations. 

These organisations are not open to the general public, and some are "by invitation only". The BCA, for example, is only open to the major corporations, largely foreign, and the NSW Business Chamber’s Sydney First sub-organisation is exclusively by invitation.

This is part of the mechanism through which capitalist class rule is implemented in Australia.

It is only through class struggle that the worst of its demands can be thwarted.

The Property Council of Australia waxes lyric over Mike
Returning to the PCA, its chiefs represent Property and are chosen because they have exerted enormous real power and done real service in their class’s interest. 

Jane Fitzgerald, for example, the current NSW executive director, was the CEO of the Royal Commission into Trade Union Governance and Corruption. 

Paul Ritchie, head of audio & communications, was head of communications and senior advisor to ex-PM Tony Abbott and his press secretary for two years whilst Abbott was in opposition. 

It wouldn’t be too hard for them to give their mate, Mike Baird, a bit of encouragement. 

And when Mike acted against the recalcitrant councils with force, Jane Fitzgerald indeed congratulated him for having the political courage to take on a task that had been left in the too hard basket for decades.

"Fewer, more professional & financially viable councils will benefit business & the broader community greatly" she added. 

Her congratulations appeared in a PCA article entitled "Sydney Council Reform Will Be Baird’s Enduring Legacy".

How developers benefit from the new council arrangements
KPMG’s "Sydney First" report, commissioned by the Sydney Business Chamber, and released to the public in 2009, found that:

•    Larger councils are more efficient in the processing of development applications both in terms of average days taken and the average cost of processing each development application;
•    Councils that have a higher number of business properties within their boundaries typically levy lower rates on those businesses;
•    Councils with relatively more population density also levy lower rates on businesses;
•    Larger councils incur lower employee costs per capita; and
•    Councils that are larger in terms of population exhibit marginally lower primary expenses per capita.

In short, huge cost savings for the large developers that make super-profits at the expense of progressively poorer representation for the local people. 

The limits of bourgeois democracy can be clearly seen here as basic democratic rights are destroyed in the interests of big business. 

As outgoing Parramatta Lord Mayor, Paul Garrard said when he was replaced by an administrator, "Quite frankly, there will be nobody there to promote the concerns of residents".

How does the size of the pre-May NSW Councils compare with comparable cities overseas?
There is no doubt that the size of pre-May Sydney councils varies with the area quite considerably. As to be expected under capitalism, in the wealthier areas, whose residents have more time & money to push for better representation, each councillor has few residents to look after. 

Typical examples of the wealthier areas: Hunters Hill council had one councillor per 2020 residents, Mosman one per 2321, Woollahra one per 3562, and Willoughby one per 4789 residents. Compare this with the poorer municipalities: Liverpool one councillor per 15822 residents, Sydney one per 16259, and Blacktown one per 18801 (KPMG’s "Sydney First" report). 

But does this justify the wholesale slaughter of the NSW councils? Shouldn’t indeed the poorer regions’ councils be provided with the more democratic representation levels of the richer areas, and not vice-versa?

A comparison with OECD countries is revealing. The publication "OECD Regions at a Glance 2013" provides the latest data on this. The average population size per local government in metropolitan areas, 2012 was 27,224 with the figure for the US being 29,300, for Germany being 18,109 and for France being 5,098.  

Only Ireland and the UK have figures approaching the Fit for the Future recommendation of 250,000 and they do not have the role differentiation at a federal, state & local level that Australia has. 

In Sydney, the average council prior to May 2016 represented more than 104,000 residents—almost four times the OECD average of 27,224 whilst the NSW average council represented more than 50,000 residents—almost twice the OECD average. 

In both cases, the Baird administration Fit for the Future proposal is totally out-of-step with other comparable countries, and requires changes moving NSW even further away from the OECD average.

Indeed, the OECD average population size per local government is less than 11% of the 250,000, arbitrarily suggested by the Fit for the Future scheme!  

Baird reveals the essence of bourgeois rule—democracy for big business, autocracy over the people
In 2014, The United Nations Democracy Fund in conjunction with the Hunger Project put out a report entitled "2014 State of Participatory Democracy".  Regarding local councils, the report suggested that: 

"You should have a government that represents your local interests. Your local council should have been democratically elected not appointed or hereditary, and you should be able to run for office if you so desire. Your local council should be autonomous, responding to your interests rather than merely following orders from above. Bureaucrats should not be able to remove or override the decisions of your local council without going to courts…"  (the report’s emphasis)

On May 12 this year, the NSW Baird administration totally repudiated this position, firing councils and putting in appointed officials to take charge until September 2017. 

But the rot began much earlier…

First, a bit of history
In April 2007 the Sydney Chamber of Commerce (now named the Sydney Business Chamber) launched its report "Who’s Governing Sydney?".  The report was prepared by Professor Edward Blakely, Chair of Urban and Regional Planning and Director of the Planning Research Centre at the University of Sydney, and marked the first major report commissioned by Sydney First, an exclusive membership sub-organisation of the Chamber.  

"The focus of Sydney First", in the words of the Chamber, "is for business and government to work together to advance Sydney as a competitive global city… Membership is exclusively by invitation only. Our members include the CEOs, chairmen and leading executives of top global businesses and major Australian corporations that have a significant presence in Sydney." (The Chamber’s emphasis) …

"Who’s Governing Sydney?" questioned if Sydney’s current governance structures were best suited to the contemporary needs of a global city.

On 18 June 2008, the Chamber, following on from the "Who’s Governing Sydney?" report, employed KPMG to put forward a strategy for making Sydney the First City of Australia. 

In the words of the Chamber’s Executive Director, The Hon. Patricia Forsythe, "To build on the conclusions drawn by Professor Edward Blakely’s report, the Sydney Chamber commissioned KPMG to report on the efficiencies of the current local government arrangements. 

For too long the structure of Sydney’s local government has acted as a barrier to improved operating
performance, regional planning and the competitiveness of Sydney as a global city.

This report makes the case for change of Sydney’s local government structure to one which supports
global competitiveness, is cost effective, based around communities of interest, and is financially
sustainable."

The critical thrust of this report was the line that many Sydney councils were inefficient or otherwise unfit using data the Chamber supplied. 

KPMG’s "Sydney First" report, subtitled "Governance Arrangements for Sydney’s Local Government Authorities", does this with a typical disclaimer at the beginning: "No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by the Sydney Chamber of Commerce."

The Sydney First report was released to the public in 2009.

Business Council of Australia’s 2011 submission to the Productivity Commission
Important relevant recommendations put forward by the BCA on behalf of its members included:

•    A reduction in the costs associated with planning, zoning and development processes that can arise as a result of delays and uncertainty, and
•    Reform to drive improved capacity amongst local government authorities to deal with complex matters.

Reference was made to "the considerable uncertainty of business that can occur as a result of the differing approaches taken by councils and individual planners in processing planning permits and identifying issues… despite most development authorities and local councils having to comply with the same legislation and processes."

Early ammunition for the "Fit for the Future" scheme
These reports became early ammunition for the Baird administration’s "Fit for the Future" agenda. With the exception of the BCA submission, their focus was specifically on Sydney. 

The authoritarian element contained within the Sydney submissions, threatening forced amalgamations, was roundly condemned by the Local Government and Shires Associations NSW (now called Local Government NSW). 

This body describes itself as "the peak industry association that represents the interests of NSW general purpose councils, 12 special purpose councils and the NSW Aboriginal Land Council."

In its April 2010 discussion paper, "Modernising Local Government", it indicated that "many councils and many local communities disagree with the measures in the (Local Government 1993) Act that facilitate dismissals and the subsequent appointment of administrators."

In a later discussion paper, "VOLUNTARY Structural Reform in NSW Local Government", it again put the position of the Councils: "Voluntary structural reform provides the most essential element for successful and sustainable change. It provides commitment to and ownership of the reform process and the resultant outcome." 

Note the wording: "the most essential element"!
 
On 25th October 2013, "Revitalising Local Government", the final report of the NSW Independent Local Government Review Panel (ILGRP) set up in March 2012, was provided to Don Paige, the then Minister for Local Government. 

The panel comprised three members headed by Professor Graham Sansom, previously Director of the Australian Centre of Excellence for Local Government at the University of Technology, Sydney.

In the preamble, the report states that "…Local government is far from realising its potential to help achieve the State government’s goal of ‘Making NSW Number One’… Sooner or later amalgamations will have to be part of the package…".

The local bourgeoisie’s goal to "make NSW Number One" refers of course, primarily, to satisfying big business’s lust for opportunities and the best possible environment to make profit and not to democratic accessibility for the typical NSW resident.

In May 2013, the review panel had designed a poll of 1500 people in the Sydney & Hunter regions. Given limited funding, polling was restricted to just two regions to ensure statistically valid results.  

Three key findings were:

•    On the whole, people appear more satisfied with the performance of local government than with state and federal governments. Local councils are seen to play a very important role in providing community infrastructure and services.  

•    Around two-thirds of respondents believe it is very important that councils are run by elected councillors, and a similar number take an interest in local government elections.

•    A majority of respondents did not support amalgamation of councils due to concerns about local government areas becoming too large and loss of local representation and identity.

Despite the concern of most respondents, the Sansom Review recommended that 105 of NSW’s 152 councils should consider merging and that eight councils in the far west of the state should form a Far West organisation. 

Here then, at this early stage, is a contradiction between the requirements of business to amalgamate councils, and the will of the people not to, as well as significant resident support for local councils’ performance compared to the higher tiers of administration.

There was, however, no suggestion by the Sansom Review that amalgamations should be forced on councils.

On September 10, 2014 Mike Baird & the Local Government Minister launched the Fit for the Future (FFTF) scheme partly based on the Sansom Review, and announced a funding package for those councils deemed fit. 

It included some sweeteners: more rate-setting flexibility, alongside cheaper loan finance; greater planning powers; priority access to state funding and grants and a wedge of cash to help any councils that wanted to merge.  
 
For a council to be deemed fit for the future, it had to submit a funding application and a self-assessment by June 2015. 

These had to include an overview of service delivery, scale of operations, financial sustainability and management of infrastructure. They had to also contain details about a council’s infrastructure backlog, asset maintenance, debt service ratio and its ability to meet its own operating costs, among other things. 

Councils had to then complete a ‘roadmap’ of how they would achieve sustainability in the future. 

The council self-assessment was required to include a merger proposal or to justify to the Independent Pricing and Regulatory Tribunal of NSW (IPART) why one was not necessary by June 30, 2015.

On the 22nd April 2015, the Baird Government appointed IPART to undertake the role of Expert Advisory Panel in assessing the Local Government FFTF proposals. IPART delivered its final report on 16th October 2015.

Massive dissatisfaction with the FFTF proposals, includes Professor Sansom
Professor Sansom in early June criticized IPART and the NSW government for judging the sustainability of councils too narrowly by over relying on financial information when concluding whether councils should merge. 

He also accused them both of overlooking some of the reforms contained in the ILGRP report and trying to rush council mergers.

"The ILGRP did not argue that amalgamations are a panacea to the problems facing local government. It favoured a mix of some amalgamations – where appropriate and justified – and increased regional cooperation and resource sharing," his submission to IPART said.

Instead he argued for a broad package of policy changes to precede or accompany any boundary changes, including improvements to councils’ revenue bases and borrowing arrangements, better resource sharing, stronger regional organisations and better governance.

His submission to IPART, critiquing its methodology, accuses it of overlooking the ILGRP reform objectives and instead relying too heavily on financial ratios and benchmarks to assess the health of councils and whether they should merge.

"Anecdotal evidence suggests that as a result, the need for wide-ranging, longer-term measures to build sustainability and capacity is often being confused with short-medium term 'budget repair', which is not what the ILGRP intended. "

"The latter would represent a much narrower (and almost certainly less fruitful) approach.

Contrary to the views expressed in some quarters, the ILGRP did not base its case for metropolitan mergers on the need to improve financial sustainability or to achieve increased efficiency and cost saving as the primary objective."

Professor Sansom also said that his report had seen regional organisations as a genuine alternative to mergers. 

"For mergers to occur and prove durable, the ILGRP saw a need for a much improved statutory process for identification of options, analysis, consultation and determination."  

He envisaged that mergers would be referred progressively to the Boundaries Commission.

He warned that the process seemed to be heading toward a " temporary fix" of simply reducing the number of councils.

"Our proposed process to test what we put forward was more rigorous than the existing process," he said. "I think councils would have had more confidence that they were getting due process and a fair hearing under the process we put forward."

Professor Sansom also emphasised that the ILGRP’s broader strategic objectives had been to create effective units of government and democratic institutions.

Bear in mind that Professor Sansom and the whole ILGRP panel provided the principal report on which the FFTF proposals were supposed to be based!

In a separate submission, the government-owned T-Corp, which has regularly done financial analysis of local government, said the "pass/fail" approach being adopted by IPART on key financial indicators was too simplistic and inconsistent with the advice T-Corp had been giving councils for years about improving their financial position.

Local Government NSW (LGNSW) seeks clarity on forced amalgamations
LGNSW is the peak industry association that represents the interests of NSW general purpose councils, 12 special purpose councils and the NSW Aboriginal Land Council. 

On the 13th March 2015, LGNSW asked the NSW Government to "come clean on forced amalgamations". 

LGNSW President Cr Keith Rhoades AFSM said the State Government had not confirmed whether councils across the state would be forced to merge under its FFTF reform package. 

"If the State Government has no intention of forcing council amalgamations it should come out and say so," Cr Rhoades said. 

However, the Baird administration remained mum.

Because of widespread dissatisfaction from councils and ratepayers with this, independent NSW lower house member, Alex Greenwich, put forward a motion on 14 May 2015, "That this House opposes the forced amalgamations of councils that are financially sustainable and have the support of their communities".

At last the Baird Government were forced to reveal their hand. 

Local Government Minister Paul Toole stood on the floor of the Parliament’s Legislative Assembly and stated unequivocally that the Government would not support a motion opposing the forced amalgamation of councils.

NSW Upper House inquires into Local Councils and the FFTF program
After the NSW 28 March 2015 election, in the Lower House (Legislative Assembly) the Liberal Party won 37 seats (40%), and the Nationals 17 seats (18%) giving the Coalition 54 seats, i.e. 58%. Thus the Coalition could easily get its agenda through here.

In the Upper House (Legislative Council), the Liberal Party won 13 seats (31%) and the Nationals 7 (17%), giving the Coalition 20 seats, i.e. 48%.  

The other seats were: ALP 12 seats (29%), Greens 5 (12%), Christian Democratic Party 2 (5%), Shooters, Fishers & Farmers Party 2 (5%), and Animal Justice Party 1 (2%).

On most issues that are important to the ruling class, the Christian Democratic Party and the Shooters, Fishers & Farmers Party can be relied on for a supportive vote in the Upper House—they are, in Parliamentary terms, "on the conservative side of politics". 

These two parties give the Coalition administration a reasonably assured majority of at least 53% to 58% in the Upper House.

However, the issue of forced amalgamations of local councils is different.

The potential nightmare of sacking elected council officials holus bolus throughout NSW was so horrendous that all non-Coalition Upper House members were horrified at the obvious arrogance & dictatorial behaviour of the Baird Coalition administration.

On the 27th May 2015, Upper House member Paul Green from the Fred Nile Group put forward a motion "That standing and sessional orders be suspended to allow private members’ business item no. 108 outside the order of precedence relating to a reference to General

Purpose Standing Committee No. 6 to be called on forthwith." This was debated, put and carried.

Paul Green then put forward a motion to the effect that General Purpose Standing Committee No. 6 (GPSC6) should investigate local government in NSW with particular reference to the New South Wales Government’s ‘Fit for the Future’ reform agenda. 

The Terms of Reference set out in the motion were comprehensive. 
As recorded in the Legislative Council Minutes No. 7—Wednesday 27 May 2015, p. 131, Paul Green’s motion, which was debated, put and carried, states:

1.    That General Purpose Standing Committee No. 6 inquire into and report on local government in New South Wales and in particular: 
(a)    the New South Wales Government’s ‘Fit for the Future’ reform agenda, 
(b)    the financial sustainability of the local government sector in New South Wales, including the measures used to benchmark local government as against the measures used to benchmark State and Federal Government in Australia, 
(c)    the performance criteria and associated benchmark values used to assess local authorities in New South Wales, 
(d)    the scale of local councils in New South Wales, 
(e)    the IPART role in reviewing the future of local government in New South Wales, assisted by a South Australian commercial consultant, 
(f)    the appropriateness of the deadline for ‘Fit for the Future’ proposals, 
(g)    costs and benefits of amalgamations for local residents and businesses, 
(h)    evidence of the impact of forced mergers on council rates drawing from the recent Queensland experience and other forced amalgamation episodes, 
(i)    evidence of the impact of forced mergers on local infrastructure investment and maintenance, 
(j)    evidence of the impact of forced mergers on municipal employment, including aggregate redundancy costs, 
(k)    the known and or likely costs and benefits of amalgamations for local communities, 
(l)    the role of co-operative models for local government including the ‘Fit for the Futures’ own Joint Organisations, Strategic Alliances, Regional Organisations of Councils, and other shared service models, such as the Common Service Model, 
(m)    how forced amalgamation will affect the specific needs of regional and rural councils and communities, especially in terms of its impact on local economies, 
(n)    protecting and delivering democratic structures for local government that ensure it remains close to the people it serves, 
(o)    the impact of the ‘Fit for the Future’ benchmarks and the subsequent Independent Pricing and Regulatory Tribunal performance criteria on councils’ current and future rate increases or levels, and 
(p)    any other related matter.

2.    That with the agreement of the committee participating members’ travel costs be covered by the committee.

3.    That the committee report by Monday 17 August 2015, unless the committee resolves to table at a later date.

The Chair of GPSC6 was Paul Green, and the Vice-Chair, Liberal Upper House member, Lou Amato. Others on the GPSC6 committee were a second Liberal, a National, two ALP and one Greens member.

Submissions closed on July 5 and there were public hearings in Sydney and regional NSW shortly after.

 

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