Hired Guns: Local Government Mergers in New South Wales and the KPMG Modelling Report

© 2017 CPA Australia Across the developed world, including Australia, public policymaking now rests heavily on commissioned reports generated by for-profit consultants, contrasting starkly with the earlier customary reliance on the civil service to provide informed policy advice to political decision makers. Dependence on commercial consultants is problematic, especially given the moral hazards involved in ‘hired guns’ providing support for policy ‘solutions’ desired by their political paymasters. This paper provides a vivid illustration of some of the dangers flowing from the use of consultants by examining the methodology employed by KPMG in its empirical analysis of the pecuniary consequences of proposed municipal mergers as part of the New South Wales’ (NSW) Government's Fit for the Future local government reform program. We show that the KPMG (2016) modelling methodology is awash with errors which render its conclusions on the financial viability of the NSW merger proposals fatally flawed

Amalgamation in action: Participant perspectives on the Armidale regional council merger process

Under its Fit for the Future reform programme, in May 2016 the New South Wales (NSW) government forcibly merged a number of municipalities, including the Armidale Dumaresq Council and the Guyra Shire Council in the New England region of northern NSW. Whilst scholarly attention has focused on the likely impact of municipal mergers on council performance at the system‐wide level (Bell, Dollery & Drew 2016; Economic Papers: A journal of applied economics and policy, 35, 99), much less effort has been devoted to the analysis of the perspectives of council managers and employees involved in forced consolidation. In order to address this gap in the literature, in this paper we present a case study of compulsory council consolidation of the Armidale and Guyra councils based on interviews with senior managers as well as a survey of council workers

Inconsistent Depreciation Practice and Public Policymaking: Local Government Reform in New South Wales

Public policy based on numerical indicators - a form of 'public management by numbers' - has become commonplace across the world. Whereas a good deal is known about the deleterious effects of this type of policymaking - including ratcheting, output distortion and 'gaming' - unfortunately little attention has focused on the adverse local government policy consequences of inconsistent depreciation accruals by local authorities. This paper seeks to address this gap in the empirical literature on local government performance. After examining the use of accounting data by local government policymakers, the paper reviews available empirical evidence of inconsistent depreciation practice both in Australia and abroad. We then consider the recent New South Wales (NSW) Independent Local Government Review Panel's use of accounting ratios as supporting evidence for boundary change in local government as a case study of the adverse impact of inconsistent depreciation practice. The NSW experience clearly demonstrates the distortionary effects of empirical evidence resulting from significant variation in depreciation accruals by individual local councils. The paper concludes with an assessment of the options available to local government policymakers wishing to obtain more accurate accounting accrual data for policy formulation purposes