Some Sydney councils want to break up, but who will foot the bill?
The mooted break-up of forcibly merged NSW councils including Inner West is set to be derailed because the new NSW Labor government doesn’t want to foot the bill.
Despite some councils pushing ahead with demerger plans based on previous assurances the costs would be covered by the state government, new Local Government Minister Ron Hoenig has decided the multimillion-dollar bill isn’t its responsibility.
The decision is certain to infuriate local councils seeking to break apart.
It is particularly significant for the Inner West, which last year presented a business case to the NSW Boundaries Commission for a demerger after 62 per cent of residents voted in support of reverting to Marrickville, Leichhardt and Ashfield councils in a 2021 poll.
The business case is predicated on the government paying for the cost of the demerger, which Inner West Council estimates to be more than $150 million over 10 years.
Inner West Mayor Darcy Byrne said the council submitted a business case on the basis the NSW government would pick up the bill, and that councillors would not be sacked and an administrator appointed. However, he said it was now unclear whether this would be the case.
“Having submitted the demerger proposal last year, we want to see the Boundaries Commission inquiry commence immediately,” he said. “We don’t want to see the process dragged on for years.”
Grantley Ingram, a spokesman for Demerge NSW, said refusing to pay for de-amalgamations would be “a huge backflip by Labor”.
“Labor went to the election promising to respect the wishes of communities in merged councils for whom the 2016 forced amalgamations are not working,” he said.
“It cannot honour that promise by withdrawing the means for councils to do exactly that.”
While in opposition, Labor in 2021 had changes inserted in the Local Government Act stating the minister is “to ensure the cost of any de-amalgamation ... is fully funded”. Following that change Ally Dench, then executive director of the Office of Local Government, told budget estimates “there is a requirement to fund” de-amalgamations approved by the minister.
But the Herald has learned that Labor is relying on a clause in the legislation stating demergers would be funded “by making grants ... or using money otherwise appropriated by parliament for the purpose”. There is not expected to be any money set aside for demergers when Treasurer Daniel Mookhey makes a budget statement to parliament this week.
While a decision won’t be made on the Inner West – or any other council – until the NSW Boundaries Commission presents its findings to the minister, a refusal to pay the costs of demerging could spell the end of it and other mooted separations.
The Snowy Valley Council in southern NSW will this week vote on whether to submit a demerger plan to the NSW Boundaries Commission after it commissioned University of Newcastle academic Joseph Drew to compile a business case on a potential return to the separate shires of Tumut and Tumbarumba.
Drew’s report found demerging made sense: “The fact that the NSW state government is now responsible for the costs of de-amalgamation changes the calculus remarkably.”
It is also a hammer blow for the many demerger groups across NSW after Labor promised to give communities the chance to hold referendums. While it insists it will keep that promise, demergers are less likely to proceed if the costs are not borne by the government.
Among those groups is the Protect Pittwater Association on the Northern Beaches, whose president, Simon Dunn, is campaigning for a local plebiscite based on what he called the threat of “increased density” in the northern enclave. Northern Beaches Mayor Sue Heins categorically ruled out any move to split, telling the Herald it was “off the cards”.
Rumours of the government’s reluctance to pay for the cost of demergers surfaced after a recent briefing between officials from the Office of Local Government and the Inner West Council.
The Greens’ local government spokeswoman, Amanda Cohn, said after that briefing she had been told the government was “looking at changes to the legislation that would mean that demerging councils have to foot the bill for demergers themselves”.
“I’ve already spoken to councillors in merged councils who are really worried this change might affect the decision in their local community of whether to de-amalgamate or not, and that’s a real disservice to those communities,” she said.