Why local government isn’t local

It’s reported yesterday that Ann Sudmalis, the Liberal member for the federal seat of Gilmore, is under fire from her local branch members for having stood up against the state government’s planned massacre of local councils, and supported a Labor-drafted motion that condemned the plan as “arrogant and ill-considered.”

Ms Sudmalis told Fairfax Media that she stood by her criticism of forced council amalgamations, which would see Kiama and Shoalhaven merged and Shell Harbour [a typical piece of Fairfax subediting – should be Shellharbour] and Wollongong merged.

Dissension in the New South Wales Liberal Party is hardly news, but in this context don’t miss a piece in last Thursday’s Conversation by Brian Dollery, professor of economics and director of the Centre for Local Government at the University of New England, in which he reports the results of a study that he and his colleagues conducted on the effects of amalgamations in Australian local government.

It will surprise no-one who has studied the subject that they found no evidence that amalgamation produced any tangible benefits:

In particular, the financial performance of local authorities does not improve as advocates of amalgamation contend. On the contrary, amalgamated municipalities often perform worse than their unmerged counterparts.

The Baird government is only the most recent to jump on this particular bandwagon; over the last 25 years the destruction of local government in most states has been a bipartisan project. Amalgamation has gone hand in hand with a program of un-democratising councils; the representative element in local government has become weaker, not stronger.

The aim, often explicit, has been to reduce local councillors to the equivalent of a company’s board of directors, setting broad policy but not interfering in administration. But the analogy fails, because a company’s operations are constrained by the market; self-interest forces its executives to attend to the share price and the threat of hostile takeover or bankruptcy.

Local bureaucrats have no such constraints: democratic control has to do the job instead. Brian Galligan, who edited a generally sympathetic collection of essays on Victoria’s restructuring, argued that their success “will ultimately be judged by their effectiveness in enhancing democracy … rather than in achieving efficiency in service delivery.” Clearly, that judgement must now be negative.

But although I would disagree, there would at least be an argument to make that we should accept a loss of democracy if there were large enough benefits to be gained in improved efficiency. What’s harder to explain is the way that governments are so resistant to examining the evidence that shows those benefits to be a myth.

As Dollery says, the new monster-sized councils actually tend to exhibit diseconomies of scale: amalgamation has “created entities that were simply too large to be run efficiently.”

When I posted about this on Facebook, my friend Stephen Luntz suggested that governments have been captured by the idea that there is a conflict between efficiency and democracy, so that any reform that weakens democracy is assumed, without further evidence, to produce an efficiency gain.

I think that’s probably close to the truth. But the record also suggests an even more troubling conclusion: that state governments have not been driven by any concern for efficiency at all, but simply by hostility to local democracy, and the destruction of local government has not been a means (however poorly chosen) to some end but rather an end in itself.

One thought on “Why local government isn’t local

  1. In Queensland, Treasury drove the amalgamations because it thought that some were weak financially and did not like having to bail them out.

    The amalgamations were to reduce the risk to the state. Even so there are periodic rescues, for example to provide water to a town that is running out.

    Like

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