KIAMA-SHOALHAVEN AMALGAMATIONPROPOSAL – NO FORESEEABLE BENEFITS

Councillor Kathy Rice – Kiama Council

February 22, 2016

In proposing a Kiama-Shoalhaven merger, the Government’s rush to achieve outcomes hascaused it to disregard all publicly released reports and recommendations relating to Kiamaand instead derive a case for urgency of amalgamation that it has not been prepared to sharewith the public.

The merger proposal correctly records that the Independent Local Government Review Panel(ILGRP) recommended that Kiama remain a standalone council. Accordingly, the laterIPART assessment of Kiama’s fit for the future plan also “did not find evidence for a betteralternative to the council’s proposal to stand alone”.

However the text of the Shoalhaven-Kiama merger proposal completely misrepresents theconclusion of the ILGRP by joining two unrelated events into the one sentence “Given theassessment that Kiama is ‘not fit’ for the future, the Panel commented that Shoalhaven mightbe an appropriate partner for Kiama”. This statement was confirmed as incorrect by thepanel chair, Professor Graham Sansom on 24/01/16, in an email responding to the query of alocal citizen. He reiterated that he could not see the justification for an amalgamation ofKiama and Shoalhaven at this stage.

We are now asked to respond to a proposal that is insufficiently supported by evidence andnot in the interest of our area at this time.

I have previously written at length to the Delegate and State Politicians explaining how Kiamahas been short changed and I will now focus on some of the evidence the Boundaries Commissionwish to consider.

1 The financial advantages or disadvantages to the residents andratepayers

Shortly after the list of proposed amalgamations in NSW was released, Council was directedto a hastily assembled merger proposal that was awash with errors. There have since beensome significant financial corrections, but no changes to the recommendations of the report.How can the calculations in the report be valid if they were based on incorrect data is aquestion that needs to be asked. Is it really possible to adequately determine any financial

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advantages to ratepayers from an incomplete and flawed document?

The accounting methodology used by KPMG still remains sketchy although two documentshave now been made available. The NSW government document Local Government Reform:Merger Impacts and Analysis and the more recent KPMG report Outline of FinancialModelling Assumptions for Local Government Merger Proposals, give some idea of the methodused to assess projected cash flow and deduce savings for Councils over a time span of 20years. A Discount Cash Flow Analysis technique has been used to compare the value of thestatus quo with that of a merged council. It used a discount rate of 9.5%. Why this rate waschosen was not justified. The KPMG Financial Modelling Assumptions document states thatit used this rate to maintain consistency with the NSW Treasury 2007, GovernmentGuidelines for Economic Appraisal. However that document states that a central discountrate of 7% should be used. Perhaps the 9.5% was prudently used to show even the lowestprojected value could be an improvement, yet any results are only made plausible through thereliability of all of the data that is used. The Status Quo data can be reliably obtained fromthe income and expenses of the two Councils in their Long Term Financial Plans. Howeverthe merged council projections are not so watertight. Only the income of a merged councilcan be reasonably calculated, with the expenses including that of the merger and ongoingexpenses, having to be assumed before the calculation of eventual value can be made. Thisweakens the strength of a before and after comparison and cannot be relied upon, particularlywhen the data points used in calculating future value have all been assumed by theGovernment and not cross referenced with Councils. The result is that the final values areheavily skewed by government assumptions making it questionable whether they are reliableindicators of future worth.

In the Kiama Shoalhaven merger proposal, savings are described as staff reductions,purchasing efficiencies and reduction in councillor fees. The savings represent only 1.43% ofthe two councils combined equity and mostly represent the reduction in their combinedworkforce. This is no indicator of continued strength into the future.

Any advantage to ratepayers is disputable, as Council is a major employer and contributor toeconomic stability in Kiama and any job losses are damaging in a region that is still onlyplanning greater economic growth. Every Council job has a flow on effect into localbusinesses. The region is already being hit hard with job losses at BlueScope Steel andimpending job losses at the Illawarra Collieries. The savings on councillor fees come at a hugecost with the number of ratepayers per councillor almost quadrupled. Efficiencies inpurchasing power can already be realised through the Illawarra Pilot Joint Organisation(IPJO). IPJO has already demonstrated itself as a very successful model of joint organisation.It won the inaugural Local Government Procurement NSW Award, presented by Paul Toole atthe 2015 Local Government Procurement Conference. The award recognised IPJO’s successfulcollaboration on a joint tender to establish a panel for a number of trade services used byeach council.

Overall the gains posed by the Amalgamation Proposal are minor with a major likelihood ofcommunity destabilisation.

A mostly negative impact on ratepayers is likely. The 4 year rate freeze imposed by themerger proposal introduces ongoing deficits that will need to be redressed through reduction

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of services, sale of public assets or substantial increases in rates after those constrained years.None of these outcomes are in the long term interest of ratepayers and they introduce bothfinancial and personal insecurity. Professor Brian Dollery points out that there has never beenevidence of downward pressure on rates wherever amalgamations have taken place inAustralia.

2 The community of interest and geographic cohesion

In 1834 Wollongong was the first major town gazetted in our region. Kiama was proclaimedin 1839 and Nowra in 1852. Despite the Nowra Bridge being built in 1881 and the rail linkcompleted between Bomaderry and Kiama in June 1893, a strong community of interesthasn’t really developed between the two areas. The big smoke of the first major centreWollongong and the train line towards Sydney have always beckoned more convincingly toKiama citizens.

An analysis of each city’s community directory confirms the cultural separation between theShoalhaven and Kiama. Out of hundreds of entries, the Shoalhaven directory has 28 entriesfor services available in the Illawarra. Similarly, the Kiama directory has only 15 entries forservices in the major towns of the Shoalhaven. The extra distance or inconvenience oftravelling south for services that are available in Kiama or even northwards up the train lineappears to be the determining factor. The fact that there are only a few directory entries forthe neighbouring region is a correct acknowledgement of the choices that each communityusually makes when seeking services.

The communities of the two areas are similar in some ways but very different in others. Thedifferences reflect the differing history and geography of each area. The settlement pattern intoeach area continues to differ with decisions influenced by factors such as desired locality, landsize and value, and the availability of nearby work. One of these differences can be readily seenby comparing the difference between the SEIFA scores (Socio Economic Index For Areas) of955 for Shoalhaven and 1055 for Kiama. This difference shows Shoalhaven to be significantlymore disadvantaged. Such a difference generates other social reasons that people choose tosettle in either locality.

3 The existing historical and traditional values in the existing areasand the impact of change on them

When Kiama’s Aged Care Centre of Excellence was first mooted, residents were veryconcerned that they would lose the continuity of community history with the hospital landand the old hospital. There has been a continual presence of volunteers who have contributedto and appreciated these two sites over the years and Council has worked to reassure thiscommunity that their assistance will still be well-valued and able to continue after KiamaCouncil’s redevelopment. If the new aged care centre was to leave Council ownership afteramalgamation, there would be an even more amplified level of community resistance forsimilar reasons because Council ownership of Blue Haven is important to the community andhas generated a high level of trust.

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Another aspect of community life that has become traditional and influencing communityvalues is the way that Kiama functions as a Healthy City. Kiama has a strong history ofresponding to community needs in decisions that influence wellbeing. Kiama has beeninternationally recognised by the World Health Organisation (WHO) as a Healthy Sustainableand Inclusive Community – A Healthy City. In simple terms this means that the principles ofequity, access, participation and residents rights have been applied to community planning.The prestigious award of Healthy City requires a Health Plan to be developed and evidence ofits impact demonstrated to the WHO. The WHO noted that Kiama’s unique identity, goodgovernance, urban management, and level of service and infrastructure provision positivelyinfluenced the quality of life for residents. Kiama residents showed a high degree of civicpride, better health than neighbouring communities, and a sound sense of belonging.

Fundamental to Kiama’s continued progress and international acknowledgement as a HealthyCity is maintaining the supportive environment in which people can realise their full potentialas healthy individuals participating in their community. 18 years after implementation ofKiama’s health plan, citizens in in Kiama generally exhibit better health than citizens insurrounding areas. This is clearly shown in the 2013 Illawarra Shoalhaven Medicare LocalPopulation Health Profile.

Kiama residents of all ages have been encouraged to express their opinions and to approachCouncil bodies with their needs, ideas and aspirations. Such participation is known to have apositive impact on health and life satisfaction, and it is fundamental to the Healthy Cityapproach. In response Council has placed effort into helping community members build socialnetworks, access opportunities for active recreation, equitably participate in community life,readily engage in learning opportunities and live within an ecologically sustainableenvironment.

If a merged council adopts Nowra as its centre of operation, representations to Council will bediminished by the distance and expense of the commute between the two towns. Thisdisenfranchisement of our community will adversely affect community health and destroyKiama’s status as a Healthy City.

The efforts Kiama Council has made towards remaining a Healthy City are deliberate actionsthat aim to create and preserve the physical and social environments that will support andpromote better health and economic engagement. Being a Healthy City requires a high levelof political commitment and this will be at risk if the proposed Shoalhaven Kiama mergerproceeds. Shoalhaven Council’s limited involvement in community and health services displaysa very different focus that would be untenable with remaining a Healthy City and unacceptableto our community

4 The attitude of the residents and ratepayers of the areas

The Kiama Community has rallied against amalgamation. Their perspective is reflected inthe signatures on petitions and the number of letters and submissions they are continuing tosubmit. Ratepayers are concerned that their representation by councillors and their collectivevoice in a new council will decrease substantially. They are adamant that their proud andindependent community must not be subsumed into a distant and less responsiveadministration.

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To properly assess this merger proposal a separate plebiscite should be called for in accordancewith s265 of the Local Government Act.

5 The requirements of the area concerned in relation to electedrepresentation for residents and ratepayers at the local level;ANDThe need to ensure that the opinions of each of the diversecommunities of the resulting area or areas are effectivelyrepresented

The merger proposal document states that although the merged council will increase thecurrent ratio of residents to elected councillors, the new ratio is likely to be comparable withlevels currently experienced by other communities across regional NSW.

In reality, it is not actually comparable, due to the combined influence of council area and thenumber of people needing representation. There are more people in the large area covered bythe Shoalhaven-Kiama merger proposal that need to be represented than in the majority ofother communities across regional NSW.

The proposal states that Kiama-Shoalhaven councillor: resident representation of 1: 9,526 willcompare with Lake Macquarie 1: 12,309. Like so much of this hastily assembled proposal, thefigures just cannot be trusted. Lake Macquarie’s actual representation is stated in theComparative Information on NSW Local Government 2012-2013 to be 1: 15,258 and not12,309!

That aside, when the data [Councillor: Residents, size of Local Government Area (LGA)] ofthe Kiama -Shoalhaven merger proposal [1: 9,256, 4789 sq kms ] is compared to the ratiosacross all NSW councils, including all current merger proposals, there are only three otherCouncils that also have or will have, a ratio of councillors to residents 1: 9,000 or greater, thatalso have areas over 1000 sq.km.

These are Tweed [1: 12,695, 1,309 sq kms], Gosford/Wyong [1: 22,067, 1,681 sq kms] andHawkesbury/Hills [1: 18,697, 3,161 sq kms].

Kiama/Shoalhaven, Gosford/Wyong and Hawkesbury/Hills are all considering mergerproposals. The large geographic spread of their communities, plus the limited access tocouncillors across their large areas makes it unlikely that the opinions of each of the diversecommunities of the resulting area or areas will be effectively represented.

When considering the number of people to be represented per councillor in theKiama/Shoalhaven proposal, the size of the area at 4789 sq. km and the 21

2hour drive from

North to South; it becomes obvious that these dimensions will restrict comprehensiverepresentation by each councillor and diminish community input into decision making.

Kiama’s current representation and size stands at 1 councillor per 2,339 residents over 258sqkms.

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Kiama residents have regularly rallied around sensitive issues and expressed their perspectiveclearly to Council. In recent times when certain issues in Gerringong and Kiama Downs havebeen under consideration the Council Chamber has been filled with public access speakers onenight and filled again with observers at the next night’s meeting.

Our community is accustomed to knowing their councillors and meeting with them to bringissues forward. The proposed merged council covers such a huge geographical area thatcommunity members would only be able to access a few councillors, and the councillors mostdistant from them would find it challenging to understand the needs of a community sectorfurthest from where they themselves live.

To satisfactorily serve the Kiama community there would need to be much betterrepresentation than the 1 councillor to 9256 people over the 4789 sq kms that is beingproposed for the merged council. This would slash representation to a quarter of Kiama’scurrent level and have a significant impact on the sense of wellbeing in this community.

It is a move that would thrust Kiama locals from high response and political representation toa council in which they will have far less acknowledgement. The minimisation of their voicewill be magnified by the diverse range of needs among the disparate populations of the twocouncils.

The Kiama community feels it will not be adequately represented and their actions have shownthat they are not prepared to endorse a change that 92%* of them are not in favour of. (*Illawarra Regional Information Service survey January 2016)

6 The impact on the ability of the councils of the areas concerned toprovide adequate, equitable and appropriate services and facilities

As it stands now, there is a very different level of service provision between Kiama andShoalhaven. Residents have frequently expressed their concerns about this, in particularabout road conditions, waste management practices, and the management of parks andgardens. At Shoalhaven’s Extraordinary Council Meeting on 25 January, Shoalhaven’sCouncillor Watson expressed concern that if the councils were merged, the differences betweenthe two communities would result in a festering sore for many years. He was unchallengedbecause it has been accepted by Shoalhaven that a merged council couldn’t continue toprovide a different level of service to the Kiama Ward indefinitely. Indeed, creating equivalentservices is exactly what The Minister for Local Government; Mr Paul Toole expressed as oneof the amalgamation goals when he addressed Parliament on this matter on the 14th May2015. No matter which way redistribution of services evolves in an amalgamated Council, itwill create division. Shoalhaven could not afford to roll out services equivalent to Kiama’sacross the whole municipality. Even if Shoalhaven attempted to maintain Kiama to a higherstandard for an interim period, it would be resented by the Shoalhaven community. IfKiama’s services were reduced in line with Shoalhaven’s, the Kiama community would resentShoalhaven for taking away the living conditions that they had selected and paid for in theircommunity of choice.

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7 The impact on the employment of the staff

Kiama is a key employer in an area that is actively seeking to attract more local employers. Ifa significant number of jobs at Kiama Council move as is suggested by this merger proposal,the town will suffer economically. Council offers convenient access to work for urban and ruralresidents. The savings from any merger are largely due to job cuts and this would deal a largeblow to those displaced employees who need supplementary farm income and family friendlywork conditions. Other local businesses would also decline as the area’s spending capacitygradually decreased in the years following a merger.

Kiama would suffer far more than Shoalhaven if amalgamation went ahead. Contrastingly,Shoalhaven’s workforce would benefit from additional layers of management jobs, such asthose created by previous Council mergers in Victoria, New South Wales and Queensland. Inthe event of a Kiama-Shoalhaven merger, it has been assumed that the Council Offices andthe eventual extra jobs would be in Nowra. Nowra is already advantaged by having otherlarge employers in the form of State Government Offices and Defence Operations, so thisscenario will further strengthen Nowra to the detriment of Kiama.

For Kiama residents, the commute to work in Nowra would be expensive in fuel, a 45 minutedrive each way or a journey hindered by inefficient transport connections. The only option toget to work in Nowra by train before 9am is the 7.15 am train from Kiama, then bus fromBomaderry for arrival at the Nowra terminal at 8.02. The next available train/buscombination the 8.44 am train would result in a 9.32 am Nowra arrival.

Currently Kiama Council is generous in employing adults with a disability. Transport scenariossuch as that I have described would make working in Nowra difficult for those employees.

8 The impact on rural communities

A merged Council may not reliably appreciate the potential for increased food security thatthe agricultural land of Kiama could offer the region. Kiama’s land is well suited and readyfor increased and diversified agricultural production. Kiama Council is currently re-examiningpermitted land uses so that the land can play an even more valuable role in local and regionalfood production.

Kiama has consistently attempted to minimise fragmentation of agricultural land in themunicipality due to the prime soils and consistent rainfall patterns in this LGA. The 1995Gerringong Charrette identified the rural landscape as a very important attribute ofGerringong and proposed maintaining ongoing viability of agricultural land through newapproaches including bed and breakfast opportunities. In Gerringong and throughout thewhole municipality, the rural landscape is unquestionably attractive to tourists. TheGerringong community has strongly defended maintaining the southern urban boundary toprotect the agricultural land that lies beyond it. The soils in this area and throughout muchof the municipality are ferrosols (previously termed krasnozems).

Ferrosols are soils derived from basalt that are characterised by high organic matter, high ironcontent, deep topsoil and very good structure. These soils are considered some of the mostversatile and productive soils in Australia and are the reason why such intensive agricultural

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production is possible on the NSW North Coast’s Cudgen Plateau. (2001 WollongbarAgricultural Institute, Soil Health: the foundation of sustainable agriculture)

The soils at Gerringong not only have high fertility but one of the most reliable rainfalls inNSW. The highest and best use for this land is agriculture, not urban development.

As yet, these soils are incompletely recognised in the Biophysical Strategic Agricultural Landmapping of the Department of Planning and Environment. I have attached an appendixshowing the distinction between the Strategic Agricultural Land Maps for the Kiama LGAand the e-spade Soil Maps for the same area.

Action 4.11 of The Illawarra Shoalhaven Regional Plan is to “Identify regionally importantagricultural lands and reflect the outcomes in local planning controls” Further into thedescription of Action 4.11 it is stated that The NSW Government will:

• Map land that is highly suitable for agriculture and industries to better inform strategicand local planning processes.

• Develop profiles of the leading agricultural industries to guide future investment decisions.

Some of the motivation for hastily proceeding with a merger that has not been recommendedby the ILGRP or IPART, may have been contributed by developers wishing to expedite urbandevelopment to the South of Sydney. For the orderly development of The Illawarra,comprehensive land mapping needs to be completed and analysed first.

In 1879, the then Premier of NSW Sir John Robertson, was seen to have had great foresightin creating The Royal National Park as a people’s park where Sydneysiders could escape fromthe pressures of urban living and enjoy recreation facilities in a natural setting. These daysthe park is extremely well used and often cannot cope with the recreational demand placedupon it in peak holiday periods.

Protecting the rural and recreational nature of Kiama’s hinterland may be a similarly insightfuldecision that can be made today. The area is already being planned for its high value to tourism.With the increased demand for farm based experiences that seem a world away from city life,and this region being only 2 hours away from Sydney, the fertile land of the Kiama Region maybe exactly the thing for future generations to learn from, relax in and enjoy.

9 The desirability (or otherwise) of dividing the resulting area orareas into wards

If a new Council was to be formed as a result of amalgamation it would have significantrepresentation issues. Urban settlement throughout the community spreads along a broadcoastal strip extending for 160 kilometres from North to South. The largest populationcentres would be the mid-north Nowra -Bomaderry region at 34.8 thousand residents,followed by the northern Kiama-Berry region of 26 thousand people and the mid-southernUlladulla region of 16 thousand people. Another 14 major villages with sizes ranging from 2 -7 thousand residents and 30 smaller villages make up the balance of the population. The totalmerged population has been put at 120,330 with growth forecast to over 133,000 by 2031.

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The population density south of Nowra would be very different to that existing to the North.

If wards were to be considered, The Local Government Act specifies that the population inwards must be kept within 10% of each other and that the number of councillors in each mustbe the same. Wards in a merged council would show distinct differences between the northand the south.

Since the two most populous areas and half of the population would live in the northern areaof the LGA it would be difficult to avoid having two northern wards each with a dense urbanarea. These wards would be quite different in demographics and size to the wards comprisedmostly of medium sized villages in the south.

Without a ward system, the distances between major areas would make it challenging forprospective councillors to become known across the whole municipality and for all electedcouncillors to properly understand and engage in local issues. With the majority of the votingpopulation skewed to the north of the LGA it may be difficult for candidates from the southto be elected.

On balance the Shoalhaven-Kiama merger proposal does not provide any benefits forratepayers, employees or the region. It would create a dissonant community in whichcompeting demands for services could not be easily satisfied.

The population of the Kiama LGA would lose their sense of integrity and gain nothing interms of jobs, services and representation. Such an amalgamation would cause long termdisharmony and should not be supported.

Councillor Kathy Rice21st February 2016

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Appendix A Agricultural Soils of Kiama

Figure 1: Land Classified as Strategic Agricultural Land by Department of Planning andEnvironment NSW

Figure 2: Kraznosems as mapped by NSW Office of Environment and Heritage – sourcehttp://www.environment.nsw.gov.au/eSpadeWebapp/

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Figure 3: Ferrosols in the Kiama Local Government Area

Figure 4: Ferrosols as mapped by NSW Office of Environment and Heritage – sourcehttp://www.environment.nsw.gov.au/eSpadeWebapp/

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