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As the Review nears its final stage, the Board has been assessing whether local government has the capability and capacity to deliver its important mission, and how the system might be improved to better meet the needs of the whole Tasmanian community.

Some councils have argued significant local government reform is unnecessary and believe they are already well equipped to meet future community needs, perhaps with some adjustments at the margin. Most, however, acknowledge that more fundamental change is necessary and that this has been known for some time. Specifically, in the Board’s discussions with councils we have heard broad agreement from the sector that:

  • The status quo is not an optimal or a sustainable model for the sector as a whole given the growing demands, complexity, and sustainability challenges local government is facing;
  • Some form of consolidation is necessary to deliver greater economies of scale and scope, at least for some services; and
  • The scale and extent of the consolidation needed to deliver materially better services is significant and, unfortunately, this will not occur on a purely voluntary basis within the current framework.

The Board’s considered view, developed through its engagement with the sector and the research it has undertaken, is that a critical part of the solution for local government reform is increasing scale in key areas. We know enough to accept that having 29 organisational boundaries is having a significant and detrimental impact on, for example, the ability of councils to attract and retain key skills, to uniformly manage assets well, and to deliver important regulatory functions.

We also know that the competition, fragmentation, and duplication of effort that naturally occurs across 29 councils can and does hinder collaborative effort and outcomes when it comes to managing regional and state-wide challenges that transcend our current LGA boundaries

Anticipating future needs

The Review has heard that councils will face growing demands on their resources in the years ahead due to a combination of new and expanded roles and growing community needs. Councils will also need the capability to support communities through emergencies and unexpected crises, such as the COVID-19 pandemic and extreme weather events. These challenges will likely be felt most acutely in the more regional and remote communities, many of which have councils with the lowest levels of structural sustainability, capacity, and capability.

  • Demographics

    • Tasmania’s population is the oldest in the country. Despite predicted population growth, a majority of Tasmanian councils (52%) are forecast to experience population decline over the next 20 years.
    • Demographic pressures are especially acute in regional Tasmania; 92% of rural and remote councils are set to experience population decline or stagnation.
    • By 2042, Treasury projections indicate that the median age of over half of Tasmania’s LGAs will be 50 or higher. 94% of these LGAs are rural.

  • Health and Wellbeing

    • Tasmanians are more likely to experience disability or mobility challenges than the national average, and a sizeable proportion require assistance with the daily activities.
    • Disability and mobility challenges are especially acute in regional Tasmania as many residents with elevated levels of need live a significant distance from vital services.

  • Housing and workforce

    • Tasmania’s rental market is among the least affordable in the country, and a high proportion of Tasmanians experience housing stress. Tasmanians also have the lowest median weekly incomes in the nation.
    • Growth in rents and property prices for regional areas is outstripping growth in cities, and income disparity is stark in regional Tasmania.

  • Geographic scale and climate change

    • Tasmania has more councils for its land area than any other Australian State or territory (six times the national average), creating coordination and management challenges in emergency or disaster situations.
    • Tasmanian communities are facing increased risk of extreme weather events. Growing bushfire risk in regional areas poses an especially dire threat.

Emerging capability gaps

Beyond establishing the future needs of the local government sector, the Review has also assessed the current activities and functions of Tasmanian councils. This assessment has identified capability gaps which, in the absence of reform, are likely to grow over time.

There is growing evidence that many councils are unable to fulfil their statutory obligations across a range of functions, including food safety and building and plumbing inspections. These statutory functions are critical to the health and safety of Tasmanians. While performance varies widely between councils, overall, these issues were identified as more acute in smaller councils, particularly in rural and remote areas.

Workforce Shortages

In 2018, 69% of councils were experiencing a skills shortage and 50% were experiencing skills gaps. In 2022 this had deteriorated, with 86% of Tasmanian councils experiencing a skills shortage. Engineers, town planners, environmental health officers, and building surveyors were in the top five areas of shortages.

Gaps in public health monitoring and reporting

62% of councils are failing to carry out all the food safety inspections recommended to protect the public from dangerous food poisoning risks like Salmonella. 72% of councils are failing some of their responsibilities for monitoring that the water in pools and outdoor sites is safe for swimming. Smaller councils were more likely to be failing in these responsibilities than larger councils.

Uneven enforcement of building and plumbing

regulations

69% of councils are failing to perform the plumbing inspections required to ensure public safety and prevent risks like waterborne illness. 31% issued some plumbing permits without site inspections. When building orders were not complied with, councils failed to take follow-up action in 79% of cases. On these plumbing and building measures, larger councils were more likely to be fulfilling their responsibilities than smaller councils.

Planning to maintain roads and other council

assets

A review of asset management plans has found high levels of non-compliance with minimum statutory requirements. Only 42% of rural councils were compliant in 2020-21, compared with 60% of urban councils. Many councils used longer-than-recommended useful lifespans when valuing their assets. There are instances where major asset classes like stormwater infrastructure have not been accounted for at all.
Kids playing

Building capability - the benefits of consolidation and scale

In addition to sector-wide workforce shortages, the ability of councils to deliver effective and consistent services is hampered by fragmented and inefficient administrative systems and processes and competition between councils for investment, funding, and staff.

More broadly, while most councils are financially sustainable in the short term, many are concerned about their ability to meet their statutory obligations and provide the services their communities need and expect in the future.

The Board believes it is necessary to reform Tasmania’s local government system to enhance capability and capacity across the sector so that councils can either provide or advocate for the quality services and facilities communities need, expect, and deserve.

  • In rural/remote locations, councils feel compelled to act as the service ‘provider of last resort’ when State or Federal Governments, or private markets fail to meet community needs.
  • This is because people living in rural areas do not have access to the range of services available to those living in cities, including services provided by not-for-profits and by State Government departments.
  • Councils need to be supported to build their response to climate change risks with adequate funding and technical capacity.
  • Accessing adequate and affordable healthcare is becoming a growing challenge in many rural communities. While direct health and aged care are the responsibilities of State and Commonwealth Governments, councils feel compelled to address this challenge, particularly in rural communities with a high proportion of elderly and lower income residents.
  • Housing challenges are another major concern in rural communities. Some councils would like to provide more housing and services, but consider it beyond their remit and financial means.

The problem does not appear to be with individual councils, but the structure of the local government system itself. The Board believes the only appropriate response to structural constraints is structural reform.

The benefits of increasing scale across the Tasmanian local government sector have also been highlighted in submissions to the Review. The Board received 18 submissions from councils during its Stage 2 consultation, of which 13 (72%) agreed increased scale through either council or some form of service consolidation (or both) would yield benefits in terms of councils’ ability to provide better services. Nine councils noted the merits of shared services, while six advocated for some form of amalgamation. Some councils supported or acknowledged the benefits of both approaches. This sentiment was further explored and tested when the Board met individual council mayors and general managers during Stage 2.

Click on the following tabs to explore the benefits which could be achieved through increasing scale.

Delivering services at greater scale may not necessarily flow through to ‘cost savings,’ but may result in more effective and/or sustainable service delivery. For example, the SGS Greater Hobart and KPMG South-East Councils feasibility studies identified potential efficiencies of $19 million and $7.6 million per annum respectively from consolidation.

While most councils are currently ‘getting by’ financially, bigger councils with larger revenue bases and resources are, if well managed, more likely to be able to expand services and withstand financial shocks.

Greater coordination of investment decisions and regional land use and infrastructure planning can deliver economy-wide productivity gains.

A larger organisation will be more influential as an advocate to other levels of government, more able to form productive partnerships with businesses and community organisations, and more likely to attract investors to their council area.

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