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

Would Bigger Councils Yield Scale Economies in the Greater Perth Metropolitan Region? A Critique of the Metropolitan Local Government Review for Perth Local Government

Forced amalgamation is a ubiquitous feature of Australian local government reform - compulsory council consolidation programs have occurred in all states and territories, with the sole exception of Western Australia. However, the Final Report of the Metropolitan Local Government - released in October 2012 - called for a reduction of about 60 per cent of the local authorities in the Greater Perth metropolitan area. The Western Australian Government responded by announcing that the number of Perth councils will fall from 30 to 14 from 1 July 2015. The Final Report recommended amalgamation on seven main counts, including scale economies. However, apart from citing work on Tasmania by commercial consultants Deloitte Access Economics (DAE) (2011), no econometric evidence was produced in support of claims on scale economies. This paper seeks to remedy this deficiency by estimating a number of econometric models on the impact of amalgamation on Perth local government. The results of our empirical modelling suggest that scale economies, cost savings and other pecuniary gains are largely illusory. Indeed, only two of the ten main local government functions provide evidence to suggest potential economies of scale. © 2014 National Council of the Institute of Public Administration Australia