Council cooperation in New South Wales: Why have some councils not joined joint organisations?

Abstract

In common with many other municipal systems in Australia and abroad, New South Wales (NSW) local government confronts formidable challenges, not least maintaining a viable level of financial sustainability (Grant and Drew, 2017; Kuhlmann and Bouckaert, 2016). This has led the NSW Government to embark on a sweeping local government reform program, which centred on structural change through a controversial forced amalgamation process over the period 2011–2017. A significant motivation for the compulsory council consolidation program was the quest for ‘adequate scale and capacity’ through the establishment of larger merged municipal entities (Independent Pricing and Regulatory Tribunal IPART, 2015b), notwithstanding the weight of empirical evidence that forced amalgamation has generally failed to reduce operational costs (see, for example, Dollery et al., 2012; Lago-Penas and Martinez-Vazquez, 2013; Allers and Geertsema, 2016). In addition, recent empirical studies have investigated the system-wide effects of municipal mergers, with comparisons of the performance merged and unmerged cohorts of local authorities through time. In this vein, Bell et al. (2016) demonstrated no statistical differences in performance in NSW local government between councils amalgamated in 2004 and their unmerged counterparts after ten years. <br/> When the municipal merger program was abruptly abandoned on 27 July 2017, the NSW Government continued its pursuit of scale in local government by establishing a voluntary network of Joint Organisations of Council (JOs) throughout NSW, except for the Greater Sydney region, with councils invited to join a JO. JOs became operational on 1 July 2018 supported by a solid legislative framework and NSW Government seed grants. Additional funding has subsequently been provided to JOs to stimulate regional collaboration between local authorities. <br/> With its explicit emphasis on fostering regional cooperation by constellations of councils, including the provision of shared services, the JO program rests on sound evidential foundations, which point inter alia to potentially significant scale economies in service provision (see, for instance, Tomkinson, 2007; Dollery et al., 2012; Henderson, 2015). Council collaboration is ubiquitous across the globe, including Australia (Dollery et al., 2012), Europe (Henderson, 2015), Japan (Jacobs, 2004) and North America (Holzer and Fry, 2011). Moreover, it has a long history in NSW local government (Audit Office of NSW, 2018). Inter-municipal cooperation assumes numerous different institutional forms, including delegation, resource-sharing and shared services (Dollery and Akimov, 2009). <br/> However, in contrast to both municipal mergers (Lago-Penas and Martinez-Vazquez, 2013; Allers and Geertsema, 2016) and outsourcing through contracting out, privatisation and other market-orientated methods (Warner and Hefetz, 2008; Bel et al., 2010), significantly less empirical work has examined the impact of council collaboration on local government performance. Furthermore, comparatively little is known about the performance characteristics of alternative models of intermunicipal cooperation (Holzer and Fry, 2011). In addition, while some effort has been directed at the determinants of participation by local authorities in council collaboration programs in the United States and other countries (see, for example, Hawkins, 2009), almost no empirical work has been undertaken in the Australian local government milieu (Dollery et al., 2012), with a single recent exception (Audit Office of NSW, 2018). There is thus an urgent need for empirical research into the rationale for participation in intermunicipal collaboration in Australia, especially the current JO program in NSW local government. The present paper seeks to address this gap in the Australian literature by examining empirically the reasons why some NSW councils have decided not to participate in JOs. While most of the local councils which were at first hesitant in joining a JO have subsequently overcome their initial doubts and assumed membership, it is nonetheless important to consider why this hesitation existed and why a few councils still remain outside the JO network, despite the generous funding offered by the NSW Government to JOs. <br/> The paper is divided into six main sections. Section 2 provides a synoptic account of the literature on council collaboration in the local government. Section 3 provides a brief summary of the NSW Fit for the Future policy process which has culminated in the establishment of a network of JOs across NSW. Section 4 considers the nature of the new JO network as well as prior experience with council collaboration in NSW local government leading up to the formation of JOs, especially with regard to participation decision-making by individual councils. Section 5 outlines the empirical research strategy employed in the paper, including a description of councils which have not joined a JO. A discussion of the results is provided in Section 5. The paper ends with some brief comments on its policy implications in Section 6.