De-amalgamation
On 13 March 2024 the Minister for Local Government received the NSW Local Government Boundaries Commission’s report regarding the Inner West Council’s business case for de-amalgamation. The report recommended that the proposed de-amalgamation of Inner West Council should not proceed, stating this would be the best outcome for residents and ratepayers of the current local government area.
The Minister after considering the findings has exercised his decision-making powers under section 218CC(5) of the Local Government Act 1993 to not support the proposal put forward by Inner West Council for de-amalgamation.
The Minister advised that he accepted the Commission’s view that, “the financial disadvantage associated with a de-amalgamation significantly outweigh any potential financial benefits from a de-amalgamation” and that there is compelling evidence that the business case presented by Council will cost the community more money than it saves.
The NSW Government formed Inner West Council in 2016 by bringing together Ashfield, Leichhardt and Marrickville councils. In December 2021, a non-binding poll was conducted in which the Inner West community voted to de-amalgamate the existing Council and return to the three former councils. The result was carried with 62.5 per cent in favour, in a poll with 80.7 per cent turnout.
Inner West Council prepared a de-amalgamation business case and submitted it to the NSW Minister for Local Government – who is responsible for the final decision – in December 2022.
To inform the proposal, Inner West Council consulted with the community to be able to incorporate your views on which options for service provision under a de-amalgamated model are preferred by the community.
Find out more
Read the business case and flyer
Latest updates
- The Inner West Council de-amalgamation business case has been submitted to the NSW Government.
- In December 2022, the Mayor again wrote to the Minister for Local Government reiterating the concerns around costs and administration.
- The business case is predicated on the State Government, which forced the amalgamation in 2016, funding the full 10-year costs of de-amalgamation, projected to be between $178 million - $190 million, with no costs to be incurred by Inner West residents.
- Council's submission also insisted that no unelected administrator be appointed but rather, ensure the de-amalgamation process is overseen by the democratically elected members of Council, if the process proceeds.
Public hearings and written submissions
The business case has been referred to the NSW Boundaries Commission for assessment. As part of their assessment a public inquiry was held under section 263 of the Local Government Act 1993. Three sessions were held on 6 December 2023 at St Peters Town Hall, with the community able to register to speak.
The inquiry proceedings were webcast live for those unable to attend the venue and recordings of the webcast are available through the Boundaries Commission webpage.
The commission engaged Deloitte to provide advice on the financial implications of the proposal. The analysis included both a review of the business case submitted by Council and an independent analysis of financial and other information of Council.
On 9 January 2024 the commission released a summary of the key findings from Deloitte's analysis of the financial implications.
For more information contact the Executive Officer or visit www.olg.nsw.gov.au/lgbc
Submissions can be made by email to eo@lgbc.nsw.gov.au or by mail to LGBC Executive Officer Locked Bag 3015, Nowra NSW 2541 and must be received by close of business 31 January 2024.
The final decision and the legal power to undertake the de-amalgamation rests solely with the NSW Minister for Local Government.
Notice of Public Inquiry (PDF 167.8KB)
Attached below is the business case and the letter of submission from the Council to the NSW Local Government Minister.
Past chronology
Background
At the election on 4 December 2021, a non-binding poll was held regarding the potential de-amalgamation of Inner West Council where citizens were asked the following:
In May 2016, Ashfield, Leichhardt and Marrickville councils were amalgamated into one local government area by the State Government. Do you support the Inner West local government area being de-amalgamated, so as to restore the former local government areas of Ashfield, Leichhardt and Marrickville?
The results of the poll were 62.49% in favour of a de-amalgamation.
Following the Mayoral election on 29 December 2021, the Mayor wrote to the Minister for Local Government informing her of the results of the Poll. The community was informed of the poll results via Council’s publication Inner West News, sent to every household in February 2022.
At the 8 February Ordinary Council Meeting, Council considered a mayoral minute (Attachment 1: Mayoral minute - 8 February meeting (PDF 419.9KB)) and resolved as follows:
- Commences the preparation of a business case for demerger and notifies the NSW Government of the commencement of the development of a business case for demerger;
- Notes the concerns expressed by Council officers through the resolution of the Joint Consultative Committee about the impact of demerger on morale and productivity within the organisation and commits to engaging with Council staff and their representatives throughout the development of the business case;
- Notes the overwhelming majority vote of the Inner West Community to demerge; and
- Involve the community in the preparation of the business case.
On 4 March 2022, the Minister for Local Government met with the Mayor and General Manager and the outcome of the meeting was summarised in the attached letter (Attachment 2: Summary of 4 March meeting (PDF 121.3KB))
Council has engaged Morrison Low to prepare a business case in accordance with NSW Government guidelines. Morrison Low had undertaken substantial work for Council in 2015 with the development of the high level merger business cases of the former three Councils and in 2021 developing a high level cost benefit analysis (Attachment 3: 2021 business case (PDF 1.5MB), executive summary (PDF 154.8KB) and community engagement report (PDF 673.3KB)).
The 2021 Morrison Low report:
- Reviewed the former councils' 2014/15 Long Term Financial Plans
- Re-established previous financial models of the former councils undertaken in 2015 and previous modelling to 19/20
- Validated the models against the Councils that didn't merge (Burwood, Canada Bay, Strathfield)
- Compared 19/20 actual results of Inner West with the aggregated modelled position of Ashfield, Leichhardt and Marrickville
- Added changes in service levels and new industry compliance requirements, new assets, COVID-19 impacts to these models with a start date of July 2022
The 2022 business case
The draft business case that has been prepared builds from the financial impact assessment undertaken in 2021. There are no guidelines or requirements for the format or content of a de-amalgamation case, so the business case has been developed in line with the NSW Government Guidelines for Business Cases. This is what the NSW Government uses for most strategic decisions and significant funding allocations for infrastructure, technology, structural and policy change. This ensures that the business case is suitable for the decision that the Boundary Commission and Minister will be asked to make on the de-amalgamation.
The 2022 draft business case comprises the following parts:
- Part 1 The case for change: An outline of the poll and community consultation results.
- Part 2 Cost/benefit analysis: Revised 2021 Morrison Low report. Intent to investigate benefits and seek to undertake economic analysis to potentially estimate in dollar terms, including NPV.
- Part 3 Financial and Commercial Analysis: Financial viability of the demerger for the NSW Government. Section 218CC (6) of Local Government Act states that the NSW Government will cover the cost.
- Part 4 Managerial Analysis: An analysis of the organisations’ ability to deliver, the associated risk, and any identified issues pertinent to the decision.
Steps undertaken:
- The draft business case was presented to the councillors at a councillor workshop on 7 June 2022.
- The draft business case was reported to the Audit, Risk and Improvement Committee on 8 June 2022.
- The draft business case with a plan for community engagement was reported to the Council meeting on 14 June 2022 where Council resolved as follows:
That Council:
- Resolve to place the draft De-amalgamation Business Case for Inner West Council on public exhibition for 28 days;
- Endorse the public engagement activities, as outlined in the report, being undertaken, including:
- that the flyer referenced in the report be letterboxed to all households and include the known tangible, financial costs, including the costs of senior staff salary and politician costs; and non-financial risks, such as a period of anti-democratic administration; and any benefits as identified by the report and by the Audit, Risk and Improvement Committee;
- that this information also be prepared as a summary introduction to the Morrison Low business case when it appears on exhibition, where it is promoted through Council’s communication channels, and as an introduction to the survey activity; and
- that an additional online public forum be held to be Chaired by the General Manager and that Morrison Low attend the forum;
- Notes that the Audit, Risk and Improvement Committee:
- resolved that if Council does de-amalgamate that the risks associated with staff retention and engagement, loss of corporate/local knowledge, service disruption and inconsistency during the transition and IT security and controls risk in demerging systems will require significant management throughout the process and an agreed transition approach will also be critical
- requested that a comprehensive risk analysis of the de-amalgamation process and its subsequent impacts is undertaken and reported back to ARIC
- recommended that the communication to the community in relation to the de-amalgamation process clearly identifies the known non-financial risk and benefits to the community; and
- endorsed the recommendations of the ARIC meeting of 8 June 2022, in relation to the item ‘Draft de-amalgamation business case for Inner West Council’ being provided to the Council meeting on 14 June 2022, as part of the item considering the de-amalgamation business case in the Ordinary Council agenda;
- Approve the Mayor to write to the Minister for Local Government asking for a commitment that the state government pay the full costs of de-amalgamation should it occur, and that they commit to not sacking the Council and installing an administrator; and
- Officers prepare a further report to the August Council meeting, outlining the outcomes of the community engagement process along with the final business case for Council's consideration
- The Mayor wrote (PDF 511.1KB) to the Minister for Local Government asking for a commitment that the NSW Government pay the full costs of de-amalgamation should it occur, and that they commit to not sacking the Council and installing an administrator.
- An independent copywriter wrote the de-amalgamation flyer distributed to all households across the Inner West in July 2022 that outlined the draft business case and included the known tangible, financial costs, including the costs of senior staff salary and politician costs; and non-financial risks, such as a period of anti-democratic administration.
- The community consultation was promoted via Council’s website, social and digital media, media releases, Your Say Inner West, Inner West newsletters and the local newspaper.
- Independent research company Micromex undertook community consultation via a survey that any community members could undertake, alongside a phone survey.
- A report outlining the outcomes of the community engagement process along with the updated business case was presented to 13 September 2022 Ordinary Council meeting for consideration.
The results of the de-amalgamation community consultation were presented to councillors at a briefing session held on 6 September 2022.
A report was provided to Council on 13 September 2022, with the updated draft business case which included the results of the community engagement undertaken. Council subsequently resolved the following:
That:
- The Business Case for Inner West De-Amalgamation be tabled for consideration by Council;
- The Business Case be considered in a workshop for Councillors before the October meeting of Council;
- The Mayor write to the Minister for Local Government reiterating the concerns around costs and administration and seeking her specific commitment to paying the full cost should the Minister seek to demerge the Council and commit to not sacking the Council and installing an administrator; and
- The Business Case return to Council for further discussion once a response from the Minister has been received.
A copy of the business case without attachments can be found here:
Attachments