2013 Future of Local Government – National Summit Melbourne, May 2013 Amalgamation: The Queensland experience to date Learnings, Outcomes and Sustainability? Greg Hoffman PSM, General Manager – Advocacy & Simone Talbot, Manager – Infrastructure, Economics and Regional Development

Paint the picture – from then to now Compare similarities and differences over 20 years Sustainability??? Objectives

History – what has happened? NSW Vic Qld WA SA Tas NT ? ?

History… Comparison of Amalgamation Processes 1992 – 1996 ALP State Government Process: comprehensive, considered & consultative Result: 166 to : Coalition State Government De-amalgamation polls: Result – 3/9 polls but no change

History… 2007 – 2008 ALP State Government Process: club fist, concocted & closed door Result: 157 to : LNP State Government De-amalgamation polls: Result – 16/31 sought polls, 4 referred, 1 recommended, 4 granted, 4 successful

History… Why different outcomes? 1996 ˃ no change ˃ reasonable process (1 year each & extensive consultation) 2013 ˃ 4 de-amalgamations ˃ repugnant process (whole State in 3 months & no consultation)  Learnings: Respect the residents, let them genuinely participate Bad process = rejected outcomes

7 7

8 8

Surveys in 2005 of 5 amalgamated cities Twice as many residents said outcomes successful than those who said it was not Service delivery – three times as many felt performance had improved than those who said it was worse Only 7% wanted the clock turned back to previous boundaries Success of Amalgamations ( )

Survey 2009 of amalgamated mayors & CEOs Overall objective – stronger councils in 5 years 3.93/5 Overall performance of new council 3.73 Community satisfaction with service levels 3.54 Community acceptance & identification 3.34 Community satisfaction with rates & charges 2.91 Success of Amalgamations (2008)

Success of Amalgamations… Mayoral Election Outcomes 2012 (31 councils) Stood down5 Returned unopposed4 Re-elected9Total 18 (58%) Defeated 13 (42%) =48% of all defeated mayors  Learning: More mayors of non-amalgamated councils were defeated in 2012 than mayors of amalgamated councils

Objective of Amalgamations  Facilitate optimum service delivery  Effectively contribute and participate in Queensland’s regional economies  Better manage economic, environmental and social planning consistent with regional communities of interest  Effectively partner with other levels of government to ensure sustainable & viable communities Basically… Stronger resource base, economies of scale, capability & capacity, better services & infrastructure, economic & regional development, growth management, “bigger picture” approach… A new local government model!!!

Starting Point 2008 Financial Sustainability Reviews – 94 councils pre-amalgamation (excl Indigenous councils)

Current Point 2012 Self-Assessed Financial Sustainability – 53 councils post amalgamation (incl Indigenous councils) 5.7% Source: AECgroup Draft Report – Identification of Factors influencing financial sustainability by local government segment 20.8% 50.9% 13.2% 9.4 %

Current Point (2012)…

Operating surplus ratio (analysis of Financial Sustainability ex Financial Statements & Department reports) Current Point (2012)… Sources: QTC, AECgroup, DLG

Net financial liabilities ratio (analysis of Financial Sustainability ex Financial Statements & Department reports) Current Point (2012)… Sources: QTC, AECgroup, DLG

Total debt per segment (analysis of Financial Sustainability ex Financial Statements & Department reports) Current Point (2012)… Sources: QTC, AECgroup, DLG

Rating effort – general/separate/special rates & levies as % of household income (Analysis of Financial Sustainability ex Financial Statements & Department reports) Current Point (2012)… Sources: QTC, AECgroup, DLG

Auditor General’s Sustainability Risk Assessment Current Point (2012)… Council CategoryHigherModerate Lower Very large2 6 4 Large Medium0 2 9 Small Indigenous TOTAL PERCENT Based on: Three financial sustainability measures ex Local Government Regulation 2012 Sustainability targets set by the DLGCRR Three years average

Current Point (2012)… Sustainability measures Operating Suplus Ratio ( ˂ 10%) Very large: Gold Coast, Redland Large: Western Downs (A) Small: Cook, Paroo Indigenous: TSIRC (A), NPA (A), 9 others Net Financial Liabilities Ratio ( ˂ 60%) Very large: Brisbane, Ipswich, Rockhampton (A), Townsville (A) $3.6B/$7.5B debt Asset Sustainability Ratio (Capital Replacement Ratio ˃ 1.5) Very large: 4/1A Large: 3/3A Medium: 3/3A Small: 3/0A Indigenous: 12/2A)

Factors influencing results: Debt funded capital expenditure growing Operating deficit problems ex depreciation Inconsistency in valuation of assets Natural disasters – major impact on capital works and asset issues Infrastructure burden growing Other impacts: Reduction and removal of capital grants and subsidies Capping of infrastructure charges SEQ water reforms (capping dividends) Lost revenue – $800m per annum Primary impacts – very large & large (SEQ & coastal councils) Learnings

Another insight Queensland’s support for Constitutional Recognition Percent

According to Prof AJ Brown: “…cross-party political support, and popular support, for recognition have been consistently stronger in Queensland. Due to the greater strength, role and performance of local government in Queensland over many decades, there remains a much stronger consensus that local government is both worth investing in, and should be invested in, in political terms.” LGAQ’s $2m Public Image Campaign has seen support levels increase over 3 years. Constitutional Recognition…

“Overall, there does not yet appear to be a material change in the vulnerability of Queensland Local Governments pre and post reforms…………” – AECgroup Current sustainability challenges are shared across both amalgamated and non-amalgamated councils driven by State government policy decisions Public acceptance of amalgamated councils confirmed by election results Amalgamations are an “opportunity” not an “outcome” Conclusions

Have amalgamations objectives been achieved? Work in progress, but it was always going to be a decade in the making SEQ, Coastal and Resource segments pre-amalgamation councils would have been significantly worse off under the financial and growth pressures of the past four years than their amalgamated successors Local government seen as “Partner in Government” Political clout is now evident Success will and has been achieved over time (5-10 years) depending on leadership, policy choices and response to external impacts Conclusions Con’t