De-amalgamation

The NSW Government formed Inner West Council in 2016 by bringing together Ashfield, Leichhardt and Marrickville Councils. In December 2021, a non-binding poll was conducted in which the Inner West community voted to de-amalgamate the existing Council and return to the three former Councils. The result was carried with 62.5 per cent in favour, in a poll with 80.7 per cent turnout.

Now, Inner West Council is preparing a de-amalgamation business case for the NSW Minister for Local Government, who is responsible for the final decision and your views will be key to Council's next steps in this process.

To inform the proposal, Inner West Council wants to hear your views on which options for service provision under a de-amalgamated model are preferred by the community.

Find out more and have your say

Read the business case and flyer

Alternatively, you can view these documents at Council's service centres at Ashfield, Leichhardt, and Petersham or at Balmain, Haberfield, Marrickville and St Peters libraries.

Complete a survey

The online survey was hosted by independent research company Micromex. The survey closed on Sunday 31 July 2022. 

Online forum

The draft de-amalgamation business case was discussed at an online forum on Thursday 21 July, 6pm.  

What happens next?

  • The community consultation will be promoted via Council’s website, social and digital media, media releases, Your Say Inner West, Inner West newsletters and the local newspaper
  • Independent research company Micromex will analyse community consultation received through the survey, alongside a phone survey they are undertaking concurrently
  • A report outlining the outcomes of the community engagement process along with the updated business case will be presented to a meeting of the elected Council for consideration

Chronology

Background

At the election on 4 December 2021, a non-binding poll was held regarding the potential de-amalgamation of Inner West Council where citizens were asked the following:

In May 2016, Ashfield, Leichhardt and Marrickville councils were amalgamated into one local government area by the State Government. Do you support the Inner West local government area being de-amalgamated, so as to restore the former local government areas of Ashfield, Leichhardt and Marrickville?

The results of the poll were 62.49% in favour of a de-amalgamation.

Following the Mayoral election on 29 December 2021, the Mayor wrote to the Minister for Local Government informing her of the results of the Poll. The community was informed of the poll results via Council’s publication Inner West News, sent to every household in February 2022.

At the 8 February Ordinary Council Meeting, Council considered a mayoral minute (Attachment 1: Mayoral minute - 8 February meeting (PDF 419.9KB)) and resolved as follows:

  1. Commences the preparation of a business case for demerger and notifies the NSW Government of the commencement of the development of a business case for demerger;
  2. Notes the concerns expressed by Council officers through the resolution of the Joint Consultative Committee about the impact of demerger on morale and productivity within the organisation and commits to engaging with Council staff and their representatives throughout the development of the business case;
  3. Notes the overwhelming majority vote of the Inner West Community to demerge; and
  4. Involve the community in the preparation of the business case.

On 4 March 2022, the Minister for Local Government met with the Mayor and General Manager and the outcome of the meeting was summarised in the attached letter (Attachment 2: Summary of 4 March meeting (PDF 121.3KB))

Council has engaged Morrison Low to prepare a business case in accordance with NSW Government guidelines. Morrison Low had undertaken substantial work for Council in 2015 with the development of the high level merger business cases of the former three Councils and in 2021 developing a high level cost benefit analysis (Attachment 3: 2021 business case (PDF 1.5MB)executive summary (PDF 154.8KB) and community engagement report (PDF 673.3KB)).

The 2021 Morrison Low report:

  • Reviewed the former councils' 2014/15 Long Term Financial Plans
  • Re-established previous financial models of the former councils undertaken in 2015 and previous modelling to 19/20
  • Validated the models against the Councils that didn't merge (Burwood, Canada Bay, Strathfield)
  • Compared 19/20 actual results of Inner West with the aggregated modelled position of Ashfield, Leichhardt and Marrickville
  • Added changes in service levels and new industry compliance requirements, new assets, COVID-19 impacts to these models with a start date of July 2022

The 2022 draft business case

The draft business case that has been prepared builds from the financial impact assessment undertaken in 2021. There are no guidelines or requirements for the format or content of a de-amalgamation case, so the business case has been developed in line with the NSW Government Guidelines for Business Cases. This is what the NSW Government uses for most strategic decisions and significant funding allocations for infrastructure, technology, structural and policy change. This ensures that the business case is suitable for the decision that the Boundary Commission and Minister will be asked to make on the de-amalgamation.

The 2022 draft business case comprises the following parts:

  • Part 1 The case for change: An outline of the poll and community consultation results.
  • Part 2 Cost/benefit analysis: Revised 2021 Morrison Low report. Intent to investigate benefits and seek to undertake economic analysis to potentially estimate in dollar terms, including NPV.
  • Part 3 Financial and Commercial Analysis: Financial viability of the demerger for the NSW Government. Section 218CC (6) of Local Government Act states that the NSW Government will cover the cost.
  • Part 4 Managerial Analysis: An analysis of the organisations’ ability to deliver, the associated risk, and any identified issues pertinent to the decision.

Steps undertaken:

  • The draft business case was presented to the Councillors at a Councillor workshop on 7 June 2022.
  • The draft business case was reported to the Audit, Risk and Improvement Committee on 8 June 2022.
  • The draft business case with a plan for community engagement was reported to the Council meeting on 14 June 2022 where Council resolved as follows:

    That Council:
    1. Resolve to place the draft De-amalgamation Business Case for Inner West Council on public exhibition for 28 days;
    2. Endorse the public engagement activities, as outlined in the report, being undertaken, including:
      1. that the flyer referenced in the report be letterboxed to all households and include the known tangible, financial costs, including the costs of senior staff salary and politician costs; and non-financial risks, such as a period of anti-democratic administration; and any benefits as identified by the report and by the Audit, Risk and Improvement Committee;
      2. that this information also be prepared as a summary introduction to the Morrison Low business case when it appears on exhibition, where it is promoted through Council’s communication channels, and as an introduction to the survey activity; and
      3. that an additional online public forum be held to be Chaired by the General Manager and that Morrison Low attend the forum;
    3. Notes that the Audit, Risk and Improvement Committee:
      1. resolved that if Council does de-amalgamate that the risks associated with staff retention and engagement, loss of corporate/local knowledge, service disruption and inconsistency during the transition and IT security and controls risk in demerging systems will require significant management throughout the process and an agreed transition approach will also be critical
      2. requested that a comprehensive risk analysis of the de-amalgamation process and its subsequent impacts is undertaken and reported back to ARIC
      3. recommended that the communication to the community in relation to the de-amalgamation process clearly identifies the known non-financial risk and benefits to the community; and
      4. endorsed the recommendations of the ARIC meeting of 8 June 2022, in relation to the item ‘Draft de-amalgamation business case for Inner West Council’ being provided to the Council meeting on 14 June 2022, as part of the item considering the de-amalgamation business case in the Ordinary Council agenda;
    4. Approve the Mayor to write to the Minister for Local Government asking for a commitment that the state government pay the full costs of de-amalgamation should it occur, and that they commit to not sacking the Council and installing an administrator; and
    5. Officers prepare a further report to the August Council meeting, outlining the outcomes of the community engagement process along with the final business case for Council's consideration
  • An independent copywriter wrote the de-amalgamation flyer distributed to all households across the Inner West in July 2022 that outlines the draft business case and includes the known tangible, financial costs, including the costs of senior staff salary and politician costs; and non-financial risks, such as a period of anti-democratic administration.
  • Council has engaged Micromex Research to conduct a statistically valid phone survey to seek community feedback on the draft business case. Micromex is also hosting a survey which the broad community can participate in, using the same questions. The survey is available online and in hard copy, with accessibility supported through the TIS and voice relay services.
  • The Mayor has written (PDF 511.1KB) to the Minister for Local Government asking for a commitment that the NSW Government pay the full costs of de-amalgamation should it occur, and that they commit to not sacking the Council and installing an administrator.

Attachments

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Page last updated: 01 Aug 2022