Posted on September 11, 2014 by Sue Puckeridge

Government announces $1 billion ‘Fit for the Future’ funding package to encourage Local Government mergers

The State Government yesterday announced the $1 billion “Fit for the Future” funding package which it has described as “the most significant investment the State has ever made in the local government sector”.

The funding package, which responds to the final recommendations of the Independent Local Government Review Panel and the Local Government Taskforce, is the strongest statement to date that the Government remains committed to a strong and effective local government and in particular to voluntary local government amalgamations (although the Government is no longer ruling out forced amalgamations).

Fit for the Future package – what is it?

According to materials put out by the Office of Local Government (OLG), the Independent Local Government Review Panel’s final report made it clear that the system of local government in NSW “is not working as well as it should be”.

Consequently, the Fit for the Future package is primarily a funding scheme designed to incentivise local governments to become “Fit for the Future” by encouraging them to develop the scale and capacity the Government believes necessary to enable them to provide quality services and infrastructure into the future.

The Government is committing:

• $258 million to assist councils who decide to merge and make the changes needed to provide better services to our communities ($153m for Sydney councils and $105m for regional councils);
• $13 million to support Councillors that lead the transition to a new council;
• $5.3 million to get newly formed regional Joint Organisations up and running in regional areas;
• $4 million innovation fund to help small rural councils develop innovative ways of working;
• to provide access to experts to develop a plan and implement change;
• to the development of a new streamlined Local Government Act that aims to reduce red tape and regulation and places Integrated Planning and Reporting at the heart of council operations; and
• to reviews of the regulatory burden on local government and the rating system.

Councils that become Fit for the Future will also have:

• access to a State borrowing facility to help fund local infrastructure, with potential savings to NSW councils of up to $600 million in interest payments;
• more flexibility with procurement and simplified reporting;
• access to a streamlined IPART process for setting rates; and
• eligibility for additional planning powers.

What is a “Fit for the Future” Council?

A Fit for the Future council is described as one that is:

• Sustainable – able to generate sufficient funds over the long term to provide an agreed level and scope of services and infrastructure;
• Efficient – achieves value for money from efficient service and infrastructure delivery;
• Effectively manages infrastructure and delivers services for communities;
• Has the scale and capacity to engage effectively across community, industry and government.

What must Councils do to become Fit for the Future?

The Government expects all councils (with the exception of those in the Far West) to  perform a self-assessment of their financial management, service delivery and scale of operations in the coming months in order to submit a proposal on how they intend to become Fit for the Future by 30 June 2015.

Submissions will be assessed by the Independent Expert Panel against criteria and benchmarks set by the OLG based on the work of TCorp and the Independent Local Government Review Panel as reviewed by the Independent Pricing and Regulatory Tribunal (IPART).

The Independent Expert Panel will make recommendations to the Minister for Local Government in December 2015. Councils will then begin to implement their approved roadmaps in March 2016 and support will be provided to ensure any new arrangements are in place in time for the next local government elections.

Joint Organisations and the Rural Council Model

Amongst other amendments, the package has committed $5.3 million of the Government’s funding towards establishing 15 new regional Joint Organisations to connect regional councils and provide a forum for working with the State government. Joint Organisations will be empowered to bring all councils in defined regions together to discuss and agree to strategic regional priorities for their communities which will sit above the Community Strategic Plans prepared by the individual member councils.

The package also introduces the new Rural Council Model for councils with a current, or projected, population under 10,000. Councils who fit this description will be invited to work with the Government in developing the model recommended by the Independent Local Government Review Panel.