Local Government Board Review FINAL REPORT: REVIEW OF VOLUNTARY AMALGAMATION AND SHARED SERVICES OPTIONS SORELL AND TASMAN COUNCILS Voluntary Amalgamation and Shared Services Options 1 FINAL REPORT: REVIEW OF VOLUNTARY AMALGAMATION AND SHARED SERVICES OPTIONS: SORELL AND TASMAN COUNCILS Author Local Government Board GPO Box 123 ISBN Hobart, TAS, 7001 978 0 7246 5748 7 Publisher Date Local Government Board August 2018 © Crown in Right of the State of Tasmania July 2018 2 CONTENTS The Local Government Board 5 Abbreviations 6 Definitions 7 Foreword 8 Executive Summary 9 1. Introduction 13 1.1. Background to the Review 13 1.2. Scope of the Review 14 1.3. Process for the Review 17 2. Local Government Reform Context: Amalgamations and Shared Services 19 2.1. Insights from shared services 20 2.2. Insights from previous amalgamation processes and outcomes 22 2.3. Other recent Tasmanian shared services and voluntary amalgamation studies 24 3. Key Features of the Sorell and Tasman Municipal Areas 26 3.1. Introduction 26 3.2. Demography 27 3.3. Economy 30 3.4. Social 32 4. Key Features of the Sorell and Tasman Councils 34 4.1. Introduction 34 4.2. Current financial viability/performance 35 4.3. Councillors and staff 37 4.4. Current Shared Services Arrangements between Sorell and Tasman Councils 38 4.5. Role of Shared General Manager of Sorell and Tasman Councils 40 3 5. Stand-Alone Councils (Option 1 – No change) 41 5.1. Introduction 41 5.2. Financial Sustainability as Stand-Alone Councils: (10-20 year outlook) 42 5.3. Effective local representation 55 5.4. Meeting regulatory obligations 56 5.5. Adequate service delivery 57 5.6. Managing municipal opportunities and challenges 59 6. Further Shared Services Options (Option 2) 60 6.1. Introduction 60 6.2. Extension of shared services 61 6.3. Potential sustainability improvements 62 7. Voluntary Amalgamation Option (Option 3) 64 7.1. Introduction 64 7.2. Financial Sustainability (10-20 years) 66 7.3. Rating Alignment: Implications for ratepayers 72 7.4. Adequate service delivery 74 7.5. Effective local representation 77 7.6. Meeting regulatory obligations 79 7.7. Managing municipal opportunities and challenges 80 7.8. Wider strategic options 83 8. Conclusions and Recommendations 84 8.1. Assessment of the Options against the Guiding Principles for Reform: Short-term and long-term Outcomes 84 8.2. Recommendations 90 9. Transitional Process 91 9.1. Introduction 92 9.2. Relevant legislative considerations 92 9.3. Transitional process 94 Appendix 1: Data tables 97 Appendix 2: Consultation Results - Tasman and Sorell Councils 101 Appendix 3: Case studies shared services (TAS) 102 Appendix 4: Recent inter-jurisdictional Shared Service Structures 104 Appendix 5: Inter-jurisdictional amalgamations 105 Appendix 6: Tasmanian Amalgamations History 106 Bibliography 107 4 THE LOCAL GOVERNMENT BOARD The current Board members are: Under Section 210(2) of the Act, the Board consists of: Mr Greg Preece (Chairperson) – Mr Preece has - the chairperson; extensive experience working in the Tasmanian local - one person nominated by the Local Government government sector. He was the General Manager at Association of Tasmania (LGAT); Meander Valley Council between 2005 and 2016 and - one person nominated by the Local Government also the General Manager at Dorset Council between Managers Australia (Tasmania) (LGMA) [now named 1999 and 2005. Mr Preece was recently appointed the Local Government Professionals Australia to the State Grants Commission (Tas) as a local (Tasmania)]; and government representative. - the Director of Local Government or his or her nominee. Mr Hadley Sides (nominee of LGAT) – Mr Sides is a Director on the Board of the Macquarie Point The Minister for Local Government appoints all Board Development Corporation and is the former Chief members, with the exception of the Director of Local Executive of the Sullivans Cove Waterfront Authority. Government, which is a statutory position. The Board He worked for 15 years as Chief Executive Officer and was supported by a dedicated Secretariat for the Director of Economic Development with Victorian Review. The Secretariat received administrative support councils. Mr Sides is also a former chairperson of the from the Local Government Division, Department of Local Government Board. Premier and Cabinet. Mr Andrew Wardlaw (nominee of LGPA Tas) – The Board’s functions and powers are set out in Part Mr Wardlaw is a former Director, State and National 12A of the Act. The Board is an independent body President of the Local Government Professionals which has a wide discretion as to how it carries out Australia (Tasmania). He is currently the General a review. However, the Act, together with the Terms Manager at the Burnie City Council. Mr Wardlaw has of Reference, provides directions that the Board 25 years’ experience in local government, and has held must consider in this review and generally. The Act General Manager positions in two other Tasmanian provides that the Board may carry out any review in Councils: King Island and West Coast. any manner it thinks appropriate (section 214C(1)) but must provide reasonable opportunity for public – Mr Tay is the current Director of Local Mr Alex Tay consultation and for any affected council to make Government in the Department of Premier and submissions (section 214C(2)). Cabinet. As Director of Local Government, Mr Tay or his nominee automatically becomes a member of the Board under the provisions of the Local Government Act 1993 (the Act). The Local Government Board is a statutory body established under the Act. The Act provides that the role of the Board is to: - conduct reviews of councils or reviews that concentrate on a specific topic or topics at the request of the Minister for Local Government; - carry out reviews of single and joint authorities; and - provided general advice to the Minister at his or her request. 5 ABBREVIATIONS AAV Assessed Annual Value CV Capital Value EPA Environment Protection Agency FTE Full Time Equivalent EMRS Enterprise Marketing and Research Services LGAT Local Government Association of Tasmania LGD Local Government Division, Department of Premier and Cabinet LGPA (Tas) Local Government Professionals Australia (TAS) LTC Local Transition Committees LTFMP Long-Term Financial Management Plan PAHSMA Port Arthur Historic Site Management Authority RASM Rural Agricultural Small and Medium RAVL Rural Agricultural Very Large SERDA South East Regional Development Association STCA Southern Tasmanian Councils Association TAO Tasmanian Audit Office TCCI Tasmanian Chamber of Commerce and Industry TEC Tasmanian Electoral Commission US Urban Small UTS:CLG University of Technology Sydney Centre for Local Government 6 DEFINITIONS Assessed Annual Value The gross annual rental value of the property excluding GST, municipal rates and land tax (but is not to be less than 4 per cent of the Capital Value of the property). Asset consumption ratio Shows the depreciated replacement cost of an asset (e.g. roads, bridges, and infrastructure) divided by the current replacement cost. It therefore shows the average proportion of new condition left in the depreciable assets. Asset renewal funding ratio Measures the capacity to fund asset replacement requirements. An inability to fund future requirements will result in revenue, expense or debt consequences, or a reduction in service levels. This is a useful measure relying on the existence of long-term financial and asset management plans. Asset sustainability ratio Provides a comparison of the rate of spending on existing infrastructure, property, plant and equipment through renewing, restoring and replacing existing assets, with depreciation. Ratios higher than 100 per cent indicate that spending on existing assets is greater than the depreciation rate. This is a long- term indicator, as capital expenditure can be deferred in the short-term if there are insufficient funds available from operations and borrowing is not an option. Capital Value The total value of the property, excluding plant and machinery, and includes the Land Value of the Property. Land Value The value of the property excluding all visible improvements such as buildings, structures, fixtures, roads, standings, dams, channels, artificially established trees, artificially established pastures and other like improvements but does include draining, excavation, filling, reclamation, clearing and any other such like invisible improvements to the land. Net financial liabilities ratio This ratio is the liquid assets less total liabilities divided by the total operating income. Shared services Shared services is where two or more councils join together to provide a service to meet community needs, this can include sharing assets such as people and capital1. The key aim of shared services is to reduce costs via economies of scale, economies of scope, improved service quality, organisational development, or increased strategic capacity. Underlying result This is the difference between recurrent or day-to-day income and expenses. (surplus/deficit) Underlying surplus ratio This ratio is the underlying result expressed as a percentage of recurrent income. 1 University of Technology Sydney: Centre for Local Government, Review of Shared services Arrangements – Between Circular Head and Waratah-Wynyard Councils, November 2016, accessed via https://www.circularhead.tas.gov.au/webdata/resources/files/Review%20of%20Resource%20Sharing%20%20-%20University%20Technology%20Sydney.pdf on 18 April 2018 at p7. 7 FOREWORD