Report finds limited need for Council amalgamation

The Hutt City Council has today released a report it commissioned from independent consultants TDB Advisory on the economic case for restructuring local authorities for the region.

According to TDB Director and report author Philip Barry, international and local evidence is that there are gains from merging the capital intensive activities like roading and water but little or no efficiency gains from amalgamating anything else but the very small Councils.

The report recommends that the Wairarapa Councils should merge and other councils in the Wellington region should merge their transport and water services while keeping independent their core local functions like libraries, recreation and regulatory policies. These are the council activities that most closely affect the local communities.

“Amalgamation of all council functions doesn’t stack up from a cost-effectiveness or local democracy perspective.

“Most council work is labour intensive. If you have a bigger council, you need more people to do the work.

“On the other hand, capital intensive tasks, like transport and water, take a lot of investment and expertise. It’s more efficient to share that investment.

“So our recommendation is for the Wellington region to copy the Auckland model for transport and water, but otherwise keep Councils as they are,” Mr Barry says.

Mr Barry says that for no territory to be worse off (ie, not paying higher average rates) under a single unitary authority, the efficiency gains from amalgamation of nine councils may need to be close to 20%. However, even the optimistic backers of a supercity assume efficiency gains of only 3%.

He says that if locals insist on amalgamation, the most efficient merging option would be combining regional transport and water and setting up four unitary authorities.

TDB Advisory is a group of highly qualified and experienced financial and economic advisors committed to independent and best-practice advice in corporate finance and economic analysis. The expertise of the four directors includes a record of advising on major corporate restructurings and public policy reform, managing the largest debt and foreign exchange exposures in New Zealand and executing major transactions and financial restructuring programmes. This team provides clients with a unique combination of hands-on experience and in-depth understanding of the corporate finance and regulatory issues faced by Australasian enterprises. TDB Advisory has a commercial alliance with Australian-based TFG International Pty Ltd (www.tfginternational.com).

ENDS

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