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Pathway 1: Significant (mandated) sharing and consolidation of services

The first possible pathway to improve councils’ capability and capacity would be an extensive program of structured service consolidation. Under this option, Tasmania would retain its current structure of 29 councils, but a range of council services would be delivered by central or regional providers. All councils would be required to participate.

The centralisation of water and sewerage services into TasWater – formerly the responsibility of individual councils – is one example of this type of model, as are joint authorities like Dulverton Waste and Southern Waste Solutions. While these examples represent two common approaches, the Review is considering a range of alternative models and innovative options. These range from joint authorities all the way to near-total administrative integration, such as exists between Kentish and Latrobe Councils.

While the Board has not formed a particular view on the specific services that may ultimately be consolidated in this model, various options have been raised in our engagement, including waste, regulatory and planning services, stormwater, roads and other major infrastructure maintenance, major systems procurement, and back office corporate and IT services. The greatest concern in Tasmania is that large-scale service consolidation could leave smaller councils without the critical mass of functions or resources required to fulfil their remaining sustainable way.


  • Service sharing can provide all ratepayers across the State with a more consistent standard of service at an efficient cost.
  • Service sharing can provide the scale required to justify the investment in modern systems that can support improved service delivery.
  • Service consolidation – via sharing, centralisation, or even outsourcing – can create economies of scope by freeing up personnel and resources for other tasks.
  • Service sharing can improve professional capabilities and career opportunities through greater and more varied experience in larger organisations.


  • Service consolidation can be subject to considerable transition costs and often requires councils to adopt common systems and processes.
  • Service consolidation requires councils to give up some autonomy and responsibility for service provision.
  • Efficiency savings are often not as great as hoped due to administrative duplication, governance costs and procurement costs. Local insights may be lost, and services may not be as responsive to local needs.
  • Mandatory state-wide service consolidation risks creating an uncompetitive monopoly provider.
  • Stripping away core local government responsibilities in areas like stormwater or roads risks leaving councils without a sustainable critical mass of staff or resources.

Pathway 2: Boundary consolidation to achieve fewer, larger councils

The second reform pathway the Board is considering would involve consolidating and redrawing local government boundaries to establish a smaller number of considerably larger and more capable councils. Under this model, councils would continue to provide a similar range of services to what they do currently, but at a substantially greater scale.

Improving capacity and capability in this way requires an appropriate balance between the need to build scale and scope, and the need to maintain adequate local representation. In other words, boundary reform should not compromise the ability of councils to be responsive, representative, and accessible to their communities. New larger councils would need to develop consistent and comprehensive community engagement strategies and programs to enhance local and place-based representation.


  • Redrawing local government boundaries would enable councils to better reflect today’s diverse, connected, and mobile communities.
  • Larger councils should have increased scope to provide a wider range of higher quality services in response to community need, without compromising economies of scope.
  • Tasmania’s large number of councils creates unnecessary divisions and duplication of service provision in neighbouring regions, especially in metropolitan areas.
  • Adjusting boundaries to better reflect communities of interest would result in more consistent strategic planning, services, and regulation.
  • Larger councils can have greater capability and capacity, better ability to attract and retain skilled workforces, and a greater diversity and standard of elected representatives.
  • Larger councils have greater capacity to establish strategic partnerships with other levels of government and organisations, allowing them to become more effective and successful advocates for their communities.
  • Larger councils would either fully or partially negate the need for complex shared services arrangements.


  • Communities place a high value on responsive councils; amalgamations can be seen as a threat to the democratic and representative function of local government.
  • Consolidating council boundaries can cause significant transition costs and sometimes job losses. Any transition would have to be carefully managed to ensure communities are not left worse off in terms of representation, services, or employment opportunities.
  • Attempts to reduce the number of councils in Tasmania have been politically contentious in the past.
  • If council organisations become too large and complex, they may experience diseconomies of scale, reducing efficiency and increasing the cost of council services.

Pathway 3: A ‘hybrid’ model combining service consolidation with boundary reform

The third potential reform pathway combines elements from the first two. It would involve some boundary reform (though less than under option two) and some service consolidation where it would deliver clear benefits.

A key advantage of this third pathway is its recognition that neither wholesale boundary change nor substantial service consolidation will be equally appropriate in all areas of the State. Some communities will require more tailored solutions, and a hybrid strategy can be more flexible to this.

The Board also recognises that, when compared to their urban counterparts, rural communities place a higher value on their councils and have distinctive priorities.

Survey research conducted by the Australian Centre of Excellence for Local Government (ACELG) clearly shows that connections to their local community are strongest in rural and regional areas and are also influenced by residents’ age and time spent living within a particular place.

Respondents living in rural and remote areas are generally more concerned about the consequences of amalgamation on local representation, cost of rates and services and their sense of belonging to the local area. People who have lived in an area longer than 10 years and who are active participants in the community are also more likely to think that their feeling of belonging to the area will be negatively impacted by amalgamation.


  • The hybrid approach can offer a balance in which local representation and service delivery is maintained, although with narrower functional responsibilities.
  • While the most conceptually complex option, a hybrid approach allows for flexibility and nuance to develop different solutions in different communities.
  • This approach offers the benefits connected to both service sharing and boundary consolidation, although at different scales.


  • This pathway has inherent risks connected to boundary and service consolidation, described in the sections above.
  • This option has the potential to create a more complex and less consistent local government system.
  • It may require accompanying reforms to revenue and funding models to promote equity and sustainability across the system.

What we heard about these pathways?

Our stakeholder discussions regarding shared services revealed a wide range of perspectives and insights. For the most part, discussion focussed on the risks associated with ‘ad hoc’ or informal arrangements.

On the topic of shared services, we heard:

  • Where a new centralised service corporation, regional entity, or joint authority is to be established, it must have transparent and carefully designed governance structures. Ideally, it should be subject to market competition, and accessibility and accountability to communities must be maintained.
  • Some council activities, particularly tourism and local promotion or economic development functions, make more sense when organised at a regional or state-wide level than locally.
  • Removing responsibility for some core services risks leaving councils without a critical mass of staff or resources threatening sustainability.
  • Creating more service provision authorities or corporations could create additional bureaucracy.
  • The benefits of service sharing are not necessarily enjoyed equally by all members of an arrangement. Even where the net impact is positive, some benefit more than others.
  • Voluntary involvement can be problematic because individual councils may ‘freeride’ by entering and exiting arrangements opportunistically

Increasing the size and reducing the number of councils in Tasmania has been a hotly debated topic, and throughout our engagement we have heard a wide range of strongly held views. Key insights and recurring themes in these conversations included:

  • Economies of scope and council capability and capacity need to be considered, not just economies of scale and cost savings.
  • There is no simple binary of large councils being effective and small ones dysfunctional – some small councils work well, and some mid-size or larger councils struggle.
  • Consolidation of councils can risk losing local knowledge and diminishing local employment – rural local governments are often the largest employers in their areas – any such reform must carefully address these issues.
  • A one-size-fits-all model driven by a desire to achieve a minimum population size for all councils will not work. Different areas have different needs and priorities, which means that Tasmania will inevitably have councils of some size variation.
  • Amalgamations can raise costs and service levels to that of the highest cost council.
  • Larger councils tend to have more success attracting grants-based funding.
  • Success is critically dependant on transition arrangements: some individuals and councils continue to “bear the scars” of poorly executed amalgamations in the past.
  • Boundary changes should be informed by the needs and social and economic features of a region, rather than the pursuit of an arbitrary, pre-determined minimum size.
  • Distance makes consolidation more complicated: local government is most highly valued in regional and remote communities, particularly for its accessibility and democratic function. Remote councils need a specific and tailored approach.
  • This option is preferred by some stakeholders who believe it offers the greatest potential to improve capability and capacity within councils while maintaining or enhancing local representation, addressing local needs and priorities, and continuing to utilise valuable local knowledge.
  • Many local government stakeholders and community members have emphasised the different needs and capabilities of urban and rural councils, stressing reform needs to be ‘place-based’ and tailored to local contexts.
  • Innovative models should be considered with this approach. One suggestion was some councils, where they lacked the capacity or capability, share services with Service Tasmania.
  • Another proposal is decentralised ‘service hubs’ – whether for operational or customer service functions – could be used to address issues of distance, ensure accessibility and connectivity, and maintain local jobs.


The Board’s detailed analysis of different service consolidation arrangements found the successful sharing of services at scale depends on a wide range of factors. The evidence suggests, while such arrangements can deliver considerable benefits, these do not accrue equally to all council services or all council areas.

Positive outcomes are most likely to be achieved where the services in question are capital-intensive and delivered in a relatively uniform or undifferentiated way across council areas. One example of this is how the creation of TasWater facilitated increased investment and subsequent improvements in the delivery of water and sewerage services.

Further, our research suggests that service consolidation will be most effective where equitable distributions of cost and risk are maintained, and councils are equipped with streamlined and compatible ICT, back office, and HR systems to enable a smooth transition to sharing. Finally, evidence from existing shared or consolidated service initiatives highlights risks to be managed and potential pitfalls to be avoided, more often related to three key issues:

  1. The first is councils’ rationale for participating. In some instances, sharing arrangements have failed due to the lack of a compelling rationale or genuine desire for collaboration among the councils involved. In some cases, the development of shared services agreements has been promoted by councils as an alternative to forced amalgamations. Having overcome the threat of mergers, however the absence of a compelling reason and commitment to resource sharing can see arrangements dissolve.
  2. The second risk relates to monitoring, reporting, and evaluation. The 2018 NSW Shared Services in Local Government audit, for example, found that “councils do not always have the capacity to identify which services to share, negotiate with partner councils, or plan and evaluate shared service arrangements”. This evidence reinforces the Board’s view that any service consolidation in Tasmanian local government would need to be mandatory and led by the State Government.
  3. Finally, research has highlighted the perceived loss of autonomy service consolidation can present for councils and their communities. Resident or councillor fears of losing control over local services can undermine service consolidation initiatives even in cases where the relevant authorities already have a long history of successful service sharing.

The Australian and international evidence concerning council consolidation has focussed on three distinct but related issues:

  • Evidence of efficiency and cost savings;
  • Evidence of improving economies of scope; and
  • Evidence of enhancing council capacity and capability.

Most research on amalgamation focuses on the first issue – efficiency and cost savings – and has produced a complex and diverse range of findings. This analysis suggests that while efficiencies and economies of scale can sometimes follow municipal consolidation, the evidence does not support pursuing boundary reform to achieve cost savings alone.

The second and third rationales – increasing economies of scope, and capacity and capability - are the primary objective of this Review. An emerging body of evidence suggests council consolidation can be an effective way to capture economies of scope, attract and retain skilled workers, and improve councils’ strategic capacity and capability.

Finally, available evidence highlights how minimum population size is not the right metric to use when deciding the size councils ought to be. Rather, boundary design should carefully consider how and at what scale councils provide services and whether their activities correspond clearly to factors such as established communities of interest or functional economic areas

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