By DANE LILLINGSTONE
RECENT research suggests that amalgamation is the same wherever you are in the world.
At a recent council meeting, a report into the effects of amalgamation was discussed.
The burning issue of amalgamation has been an ongoing topical discussion in Southern Downs.
Earlier this year, research was released by Brian Dollery from the University of New England’s Faculty of Economics, and two Southern Cross University academics, Elisabeth Sinnewe and Michael A. Kortt.
Their studies compared the financial performance of Brisbane City Council, the largest local authority in Australia, with smaller councils across Queensland and New South Wales.
Their paper, Is Biggest Best? A Comparative Analysis of the Financial Viability of the Brisbane City Council, focuses on Brisbane but provides insight into the amalgamation process across Australia and the world.
“In sum, our financial analysis of BCC casts considerable doubts over the continuing mantra that ‘bigger is better’ in the context of contemporary Australian local government,” the report said.
“Employing standard measures of financial sustainability, we found that between 2008 and 2011, the three comparison groups consistently ‘outperformed’ the BCC in key areas of financial flexibility, liquidity and debt servicing ability.
“Moreover, these findings lend further support to the growing corpus of research that suggests that ‘bigger is not always best’.
“If the claims of proponents of the ‘bigger is best’ doctrine underlying compulsory council consolidation are correct, then BCC should easily outperform comparator councils across a majority of performance indicators.”
When asked about the Southern Downs in particular, Mr Dollery said, “In general, the 2008 Queensland amalgamation and subsequent de-merger has been an expensive mess.”
The academics noted that investigations into amalgamation were almost always public inquiries at state and national level.
“A common theme that has emerged from theses official public inquiries is that the continued use of force amalgamations as the preferred policy instrument has failed to address the seemingly intractable financial problems facing local councils across Australia (in particular rural and remote councils),” the report said.
“Notwithstanding the dearth of empirical evidence, the belief that ‘bigger is better’ is so entrenched in the psyche of local government policy makers that forced amalgamation has been repeatedly used in Australia and abroad in an attempt to enhance local government efficiency.”
The report also investigated overseas council mergers. In Europe, they found that “municipal mergers had failed to deliver on their intended objectives.” Canada councils showed wages went up post-amalgamation, but so did costs while in the US they found that “municipal mergers had not met their proposed economic objectives but had instead led to increased expenditure.”
It concluded that “In general, the majority of this empirical literature casts considerable doubt on whether the purported benefits of council mergers were realised, particularly in relation to enhancing the operational efficiency of local councils.”
