Hired Guns: Local Government Mergers in New South Wales and the KPMG Modelling Report

Abstract

Across the developed world, including Australia, public policymaking now rests heavily on commissioned reports generated by for-profit consultants, contrasting starkly with the earlier customary reliance on the civil service to provide informed policy advice to political decision makers. Dependence on commercial consultants is problematic, especially given the moral hazards involved in 'hired guns' providing support for policy 'solutions' desired by their political paymasters. This paper provides a vivid illustration of some of the dangers flowing from the use of consultants by examining the methodology employed by KPMG in its empirical analysis of the pecuniary consequences of proposed municipal mergers as part of the New South Wales' (NSW) Government's 'Fit for the Future' local government reform program. We show that the KPMG (2016) modelling methodology is awash with errors which render its conclusions on the financial viability of the NSW merger proposals fatally flawed.