Sunday, September 11, 2022

Demerger Business Case

  • At the Council Meeting on Tuesday Night
    Item No:         C0922(1) Item 2
    Subject:         De-amalgamation Business Case for Inner West Council
    That the Business Case for Inner West De-Amalgamation be tabled for consideration by Council.
    What we have before us:
  • An annual Micromex Community Satisfaction telephone survey was conducted to 601 residents, 138 via landline and 463 via mobile phone.
  • The survey included two questions about demerger in an attempt to extrapolate why 62.5% voted in favour of demerging last December
  • 1400+ people completed the online survey, or posted in paper copies (which were entered by staff – note that a small number of paper surveys were not able to be entered due to respondents not providing valid responses). The online and paper survey was self selecting so unlike the phone survey, the results are not statistically valid. However, the data is still important as it highlights the views of people who have a high interest in the issue.
  • 62.5% of 104,219 voters chose yes to demerge when asked in Dec 2021
  • What price accountability - the executive and councillor headcount was 15 execs and 36 councillors estimated to cost $2.25million more than the 5 (15/3) and 15 councillors InnerWest Council currently has.
  • Transitition Cost estimated at: $31.2million
    Administrator's Report August 2017
     10. Conclusion
    There is no doubt that the State Government’s merger program has been a tumultuous one, and
    nowhere more so than in the Inner West. The hard edge approach to implementing the merger,
    involving the dismissal of councillors, as well as the contested planning and major State
    infrastructure environment in which it has occurred has made it so.

    Nonetheless, I think it is time for us to stop thinking we have been punished by being merged and to use it is an opportunity to realise real benefits for the people of the Inner West. We have a strong
    community of interest and I believe this is a solid basis for the new council to make its mark.

    We have already in our first 16 months achieved many tangible benefits for the community, including:

    an inherited budget deficit of $4.8 million cleared in the first 12 months;
    Inner West Council Administrator’s End of Term Report Page 19 | 19
    $2.5 million in annual savings in executive salaries and insurances locked in, with predicted savings of $60 million over our first 10 years;

    an Investment Policy which will make us the leading non-fossil fuel investment council in NSW, with our June 2018 target of 70% already achieved;

    a record $22 million more spent on infrastructure in our first full financial year, with a similar result expected in 2017/18;

    an extra $14 million in infrastructure funding received from the State Government, to be spent over our first three years enabling our ageing infrastructure to be upgraded;

    evidence that we are having greater influence in major State planning and infrastructure decisions, including for Parramatta Road, affordable housing and WestConnex;

    great progress on creating a modern, high performing customer-focussed organisation, with preliminary figures showing a 5% improvement in our customer satisfaction rating (Micromex 2017) from 85% to 90% in our first year of operation.

    Whilst new councillors are likely to have a more focussed approach on the traditional issues of local government, I urge them not to forget the ability to do bigger things with a bigger council – whether it be spending more on our parks, roads and footpaths, or leveraging better outcomes from the State Government. I wish all new councillors well in the important work they have ahead of them.

    Finally, I would also like to sincerely thank the 1250 men and women who make up Inner West Council for their support and camaraderie during my 16 months at the helm. I have found them to be a highly professional and responsive group and consider the Council to be in great hands for sustained success in the future.

    Richard Pearson
    E XAMINATION OF A PROPOSAL TO D E -AMALGAMATE COOTAMUNDRA-GUNDAGAI REGIONAL L OCAL GOVERNMENT AREA Report by the Local Government Boundaries Commission to the Minister for Local Government 27 J ULY 2022
    One-off costs:
    One-off costs include by Deloitte include: project resources to support transition management
    and community engagement, ICT system implementation costs, financial and legal adviser costs
    and rebranding costs. A provision for staff retraining and minor redundancy costs was also
    assumed based on the assumption that both councils would seek to realign their organisation
    structures back to pre-merger levels if a demerger were to proceed. As there has been minimal
    physical or asset consolidation following the merger, Deloitte assumed no material costs to
    re-establish or replace fixed assets.

    CRGC management estimated the one-off demerger costs to be $1.75 million. Based on its
    analysis of available benchmarks, Deloitte estimated that one-off demerger costs could be in the
    range of $1.8 million to $4.2 million (for the two new councils in total). This cost could be higher
    or lower depending on the level of cooperation between the new councils and their ability to
    achieve commercial agreement on key separation matters.

    The lower end of the range identified by Deloitte ($1.8 million) is consistent with CGRC’s own
    estimates, supported by the Drew Report, with the higher end ($4.2 million) reflecting available
    benchmarks from Queensland council de-amalgamations.

    For the purpose of the demerger analysis, Deloitte assumed the mid-point of this range of $3.0
    million in one-off costs (with $1.5 million allocated to each council). In any event, the quantum
    of one -off demerger costs, being met by the NSW Government, is not relevant to the assessment
    of the demerged councils’ future financial results

    Extracts from Demerger Report on Council Meeting Agenda of 13 Sep 2022 below


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