Council mergers 'costly and divisive'

Yolanda Zaw

Council mergers will be costly, divisive and increase rates across the metropolitan area, leaving Perth residents worse off, research shows.

A yet-to-be published study on Perth's proposed council mergers by Brian Dollery, from the NSW University of New England, says that contrary to the WA Government's assertions, bigger councils do not mean better or cheaper.

Professor Dollery points out that all States, with the exception of WA, have undergone some sort of amalgamation process.

"What we have learnt from these amalgamations is that there aren't any cost savings," he said.

"A national report into local government systems carried out in 2006 - before Queensland underwent major reorganisation - showed there were no differences in service cost levels or financial sustainability between the States that had amalgamated councils and those that did not.

"That tells us amalgamations don't make any difference but have huge costs - more than $100 million in some cases."

Professor Dollery's research examines the claims made in the State Government's Metropolitan Local Government Review final report.

He said the report made "largely unsubstantiated" assertions in favour of amalgamations and provided no econometric evidence. "The results of our empirical modelling suggest that scale economies, cost savings and other pecuniary gains are largely illusionary," he said. "Amalgamations are expensive, divisive, increase rates, raise costs and lead to a disillusionment among members of the public."

Professor Dollery said the Government's plans to redraw boundaries for about 100,000 people in each council would make Perth municipalities among the largest of the OECD countries.

Professor Alan Robson, who chaired the panel that prepared the local government reform report, rejected assertions that larger local governments were not successful.

"It's very hard to do an economic analysis of local government because there are so many variables at play," he said.

"You only need to look at places like Auckland and Vancouver to know that large local governments do work."