NSW Government spends $159,500 on consultancy fees to consider contentious Inner West Council demerger

The NSW government will fork out more than $150,000 on consultancy fees to consider a contentious ‘demerger’ of one of Sydney’s most populated councils less than a decade after it merged.

The NSW government will fork out more than $150,000 on consultancy fees to consider a contentious ‘demerger’ of one of Sydney’s most populated councils.

The Department of Planning has appointed financial advisory firm Deloitte to undertake a financial analysis of a 800 page business case into a proposal to ‘deamalgamate’ Inner West Council.

The move is the latest step in the long-running demerger debate which has simmered ever since the former Ashfield, Leichhardt and Marrickville councils were forcibly merged by the previous state government in 2016.

At the time, the government spent about $10 million to meet the costs of the amalgamation and also splashed an extra $15 million on “community infrastructure” as part of the process.

The proposed demerger took a step forward at the last local government elections when a non-binding plebiscite of inner west voters resulted in 62.5 per cent of residents expressing support for a deamalgamation.

Inner West Mayor Darcy Byrne.

A subsequent business case into the demerger, commissioned by the council, found the cost of a demerger could tally between $200.7 million and $232.8 million over a 20-year period.

A key sticking point in the business case stipulates that the state government would have to cover the costs of a demerger process, which Inner West Council estimates would tally between $178 to 190 million over a 10-year period.

The former Leichhardt, Marrickville and Ashfield Councils were merged in 2016. Photo: Joshua Hulm

Mayor Darcy Byrne – who committed to putting forward the business case to the state government for consideration – said it was important the process comes to a head to address ongoing uncertainty over whether the demerger will eventuate.

Some local Greens and independent councillors have actively supported a demerger, naming it a key election priority in the lead-up to the last local government election.

It is understood the ongoing delays over the demerger process has caused uncertainty and impacts on morale among council staff.

Local Government Minister Ron Hoenig.

The next steps in the proposed demerger process will include a review by the Local Government Boundaries Commission.

The commission will hold public hearings as part of the review before making a recommendation on a potential demerger to NSW Local Government Minister Ron Hoenig for a determination.

The Department of Planning last week awarded Deloitte a $159,500 contract to “provide financial analysis” of the council’s business case – including the advantages and disadvantages of the proposal.

It is understood Deloitte will also consider the ability for demerged councils to provide services to residents while remaining financially viable.

Mr Byrne has called for the Boundaries Commission to hold public hearings by the end of this year.

“We submitted the demerger application in January and have been requesting throughout this year that the boundaries commission get on with conducting their inquiry,” he said.

Should a demerger be approved, the council’s business case is predicated on ensuring a deamalgamation is overseen by the democratically elected councillors, rather than an ‘unelected council administrator’.

Community feedback on the demerger shows those in favour believe smaller council areas provide better management, services and facilities than a larger amalgamated council

Those opposed have raised concerns over the financial impact of de-amalgamation and the “efficiency of services” if the demerger proceeds.