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De-amalgamation in Queensland

Briefing Note to Commission, May 2014

This briefing note describes the process and context of four recent local government de-amalgamations in Queensland and the factors which led to the changes.

Size, Shape and Sustainability

In late 2004 the Local Government Association in Queensland (LGAQ) resolved to actively promote discussion amongst its members about how to ensure their long term sustainability.

The need for reform arose from the increased pressures on local government. Some councils were struggling with small populations, ageing infrastructure, difficulties attracting skilled staff, and financial weaknesses arising from a high dependence on state or federal government grants.

This initiative developed into the Size, Shape and Sustainability (SSS) programme.  One of its stated outcomes was that:

“Local government will determine its own structural arrangements demonstrating its maturity as a sphere of government.”

A number of councils took part in the programme and there was limited discussion of amalgamation as a possible means to improved sustainability.  In March 2007 the Queensland Minister of Local Government wrote to the Mayors of each council. The Minister asked for an assessment of the progress of the SSS programme and for information about the desired outcomes and timeframe for the SSS reform agenda. The councils indicated that significant structural reform would not be achieved before the local government elections in early 2008.

Meanwhile concerns were also expressed about the long term financial capability of some councils.  The Queensland Treasury Corporation (QTC)[1] prepared financial sustainability reviews for 105 councils. The reviews found that 40% were in financially "weak", "very weak" or "distressed" conditions.

The Local Government Reform Commission

The Queensland Government established the Local Government Reform Commission in April 2007 in response to the SSS programme and the QTC reviews.

The Commission’s principal task was to examine and make recommendations “for the reform of, on a whole of Queensland basis, local area boundaries, and local government classes and names.” Every council was reviewed, except Brisbane City Council, the largest local government area (by population) in Australia.

The Commission reported to the Minister of Local Government three months after its establishment. The Commission recommended Queensland's 156 councils be reduced to 72, and that the 32 Aboriginal and Island councils to be reduced to 14.

The recommendations were unpopular in a large number of areas.  Some mayors and councils co-ordinated campaigns and protests in a number of communities. Nevertheless in August 2007 the Queensland State Government swiftly pushed through legislative changes in the Local Government (Reform Implementation) Act 2007.  The new councils were elected on 15 March 2008 and the old councils then ceased to exist.

De-amalgamation

Following the creation of the new councils in 2008, community protests and objections continued. The amalgamations became an election issue during the 2012 Queensland state election campaign and the opposition Liberal National Party promised, if elected, to consider applications from former shires that wished to de-amalgamate.[2]

The Liberal National Party won the March 2012 election and the Minister of Local Government, Hon David Cristafulli, invited applications from communities in former shires wishing to de-amalgamate.  A community wishing to de-amalgamate had to:

  • submit a petition to the Minister signed by 20% of the voting population of the former Shire;
  • produce a detailed estimate of the potential financial costs;
  • demonstrate that those who signed a petition understood that the former shire wishing to de-amalgamate would have to bear the full costs of the change.

If all conditions were met, proposals would be put to a poll of voters in the former shire for a majority vote on de-amalgamation.

Applications for de-amalgamation were received from 19 communities.  The Minister determined that five of the 19 applications met the initial tests. The five applications were –

  • Douglas Shire to de-amalgamate from Cairns Regional Council
  • Isis Shire to de-amalgamate from Bundaberg Regional Council
  • Livingston Shire to de-amalgamate from Rockhampton Regional Council
  • Mareeba Shire to de-amalgamate from Mareeba-Tablelands Regional Council
  • Noosa Shire to de-amalgamate from Sunshine Coast Regional Council

The five applications were referred to the Queensland Boundaries Commissioner, Col Meng. Mr Meng was the former Mayor of Mackay in north-central Queensland and was appointed by the Minister as Boundaries Commissioner. His role was to investigate the viability of the former shires wishing to de-amalgamate from regional councils.

The QTC provided advice and assistance to the Boundaries Commissioner about the financial aspects of de-amalgamation proposals. QTC’s review included a financial analysis of both the proposed de‐amalgamating council (the Proponent Council) and what would become the remaining Council to:

  • determine the costs of de‐amalgamation for both the Proponent Council and the Remaining Council, and
  • assess the financial viability of the Proponent Council and the Remaining Council on the basis that de‐amalgamation was successful, and compare this to the financial viability of the Existing Council.

The QTC's assessments for each of the proposals were as follows:

Proposal

Existing council

Proponent Council

Remaining Council

Douglas

Sound (neutral)

Very weak (negative)

Sound (neutral)

Isis

Moderate (neutral)

Distressed

Moderate (neutral)

Livingston

Moderate (neutral)

Moderate (neutral)

Weak (negative)

Mareeba

Moderate (neutral)

Very weak (negative)

Moderate (neutral)

Noosa

Strong (neutral)

Moderate (neutral)

Sound (neutral)

The Boundaries Commissioner took into account the QTC’s assessments, as well as information about the effects on the delivery of key local government responsibilities, communities of interest and economic development.  After considering these factors he concluded that only one of the five de-amalgamation proposals, for Noosa, should be put to a poll.

His recommendation in respect of Noosa stated that –

“Although there are many reasons for the current [Sunshine Coast Regional Council] to remain as it is, the Commissioner’s view is that a new [Noosa Shire Council] would be financially viable and there enough reasons for the people of Noosa to decide the future direction of their local representation.”

In the case of the other proposals the Commissioner concluded that –

  • the proposed Douglas, Isis and Mareeba shire councils had been evaluated as unsustainable and would result in unwarranted financial burden on ratepayers
  • while the proposed Livingston Shire Council would be sustainable the remaining Rockhampton Regional Council would be unsustainable

After considering the Boundaries Commissioner's reports the Minister decided that four of the five proposals (rather than the one recommended by the Commissioner) should be put to polls.  In addition to the Noosa proposal he decided that Douglas, Livingston and Mareeba proposals should be put to polls. The Minister commented:

“I am being upfront with these communities in saying that at the end of it there will be greater costs, and in some cases, a weaker council.  It will be up to them to decide if the community gain is worth the financial pain."

On 9 March 2013 polls were held in each of the former shires of Douglas, Livingstone, Mareeba and Noosa. In all four cases, a majority voted in favour of de-amalgamation.   

The results of the polls were as follows:

Shire

Yes

No

Douglas

57.64%

42.36%

Livingston

56.59%

43.41%

Mareeba

57.90%

41.10%

Noosa

81.38%

18.62%

Following the polls the Queensland Government enacted the Local Government (De-amalgamation Implementation) Regulation 2013 to implement the changes.  The new councils came into existence on 1 January 2014.

The processes for the four de-amalgamations were a one-off occurrence and are unlikely to be repeated in the near future.  In October 2013 the Minister of Local Government told the Local Government Association conference in Cairns that:

"... I give you a commitment today, that we are not opening the door for more de-amalgamation to those amalgamated councils.  We have given the opportunity, had nineteen applications, we assessed five, four went to the vote - that is it!  End of story!  It is now up to you to unite those communities, continue to bring them forward and find ways to make sure that your regional council acts like a true regional council.  That you understand that it must be one that continues to allow individual identity of those communities, whilst finding the efficiencies that come with a larger animal."

Conclusion

The 2008 amalgamations and the 2013 de-amalgamations were conducted according to strict criteria and tight timeframes set by the State governments of the day. In this sense the process was closely aligned to state government political priorities.

It is too early to assess the performance and lessons from the newly de-amalgamated councils, which have been in operation only since January 2014. The Boundaries Commission, for example, considered financial forecasts with a five year horizon.

However the biggest single challenge which the de-amalgamated councils had to overcome was the need to demonstrate ongoing financial viability into the future, rather than to rely merely on past performance and operations. They also had to demonstrate the remaining council would be financial viable without the ‘break-away’ council. The financial parameters they had to meet were set centrally, by Queensland state government agencies.

There are also mixed views in Queensland about whether learnings from the process can be applied to wider reform of governance systems. Commentators such as academics, local government economists and other specialist analysts put differing weights on factors such as financial viability, regional leadership, economic development and communities of interest.

Further information online:

Further information about the de-amalgamation process can be found on the website of the Queensland Department of Local Government, Community Recovery and Resilience, at: http://www.dsdip.qld.gov.au/bc/

The reports of the Boundary Commissioner and the QTC on the Isis de-amalgamation proposal are at: http://www.dlg.qld.gov.au/resources/report/local-government/bc/isis-qtc-report.pdf

Volume 1 of the of the Local Government Reform Commission’s 2007 report is at: http://mountgarnet.org.au/reportTRC.pdf

Note:

This briefing note was prepared for Commissioners following a visit to Queensland by the Chairman of the Commission, Basil Morrison and the Chief Executive Officer, Donald Riezebos, in April 2014.  It is based on a literature review and discussions with members of:

  • Queensland Department of Local Government, Community Recovery and Resilience
  • Local Government Association of Queensland
  • MoretonBay Regional Council
  • SunshineCoast Regional Council
  • Noosa Shire Council
  • Brisbane City Council
  • Col Meng, former Queensland Boundaries Commissioner
  • Kevin Yearbury, former Administrative Commissioner, Local Government Reform Commission

The Commission is grateful for the co-operation and assistance of a number of elected members and officers from the above organisations.

 

Chief Executive Officer

Donald Riezebos

May 2014



[1] The Queensland Treasury Corporation is the Queensland Government’s central financial authority.  It provides a range of financial services to the State and its public sector entities, including local authorities.  These services include debt funding and management, cash management facilities, financial risk management advisory services, and specialist public finance education.

[2] A shire council is generally established in a rural area, while a city council represents an urban area. In the Australian local government setting, a regional council refers to a council formed from the amalgamation of a number of smaller councils.