Almost two-thirds of residents voted to break up their council. Now the state government says no

The Minns government has officially rejected Inner West Council’s demerger proposal, finding the cost of a split would “significantly outweigh” any benefits.

More than two years after 62 per cent of inner west residents voted to end the forced merger of the former Marrickville, Ashfield and Leichhardt councils, the NSW government has rejected the split on the basis it would leave remaining councils worse off.

Local Government Minister Ron Hoenig says he will not allow councils to demerge if they cannot prove they will be financially viable.Credit: Dion Georgopoulos

Local Government Minister Ron Hoenig said on Friday that he had accepted a recommendation from the NSW Boundaries Commission to leave Inner West Council in place.

“I have been clear and on the record that I will not allow councils to demerge if they cannot prove they will be financially viable,” he said.

“Consigning three new councils to budget deficits each year until at least 2028 would not be in the best interests of the inner west community.”

Inner West Mayor Darcy Byrne welcomed the decision, saying it was “time for all Inner West councillors to come together and commit to working to make Inner West Council even more effective and progressive”.

The Boundaries Commission was unequivocal in its finding that splitting the council would be a mistake. It found that each of the three reformed councils would have a “sustainability gap” of between $4.8 million and $12 million to 2028, a position that would be “largely unsustainable” without service cuts or rate rises.

“If this proposal were to be recommended, the ongoing costs of this de-amalgamation process will be borne by the community in the current LGA, one way or another,” the commission wrote in its analysis.

“Accepting that some 62 per cent of those who cast a vote in favour of de-amalgamation in the non-binding plebiscite, the other 37 per cent of the community will still be impacted.

“This is an important consideration in the context of a proposal which suggests that the total on-costs to the community of de-amalgamation, assessed over the next four years, are in the order of between $145 million and $200 million.”

Despite inner west residents overwhelmingly voting for the split in the 2021 plebiscite, the process behind the demerger has been slow moving. The commission noted in its findings that it was also not a major concern for many residents, saying the 204 submissions it received were less than 1 per cent of the inner west’s total population.

While some residents of the former Leichardt council supported the demerger, people from Ashfield and Marrickville were “less supportive” and “generally less engaged” in the debate.

“I understand sections of the community may be disappointed, but this decision delivers certainty for the people of the inner west,” Hoenig said.

“The community has good reason to be confident in the infrastructure and services being delivered by council.”

The rejection comes amid criticism of Labor from some local government groups over its refusal to pay for council demergers, a decision that will hamper most demerger proposals.

Despite changing legislation while in opposition that required the state government to foot the bill for demergers, Hoenig has been reluctant to embrace the policy since Labor won office and this week introduced new legislation into parliament that would remove that same responsibility.

“Within the context of local democracy … is the concept of local accountability. In the context of local democracy, decision-making and financing, it is inappropriate for a responsible state government to finance a local issue such as council de-amalgamation and pass those costs to other communities,” he said.

“As a consequence, councils themselves must fund any expenses they choose to incur through the de-amalgamation process.”

The refusal of the state to pay was noted by the commission as “very relevant” to its decision.