New South Wales State Government Failure? An Empirical Analysis of the Cootamundra Gundagai Regional Council Forced Merger

Abstract

As part of the controversial local government structural reform program in NSW, the Cootamundra and Gundagai shire councils were forcibly amalgamated into the Cootamundra Gundagai Regional Council (CGRC) in 2016. Various documents and commissioned reports prepared by NSW government agencies, commercial consultants KPMG and the NSW Boundaries Commission Delegate all claimed that significant cost savings and other financial benefits would flow from the consolidated CGRC. Using data from the four post-merger financial years, in this paper we examine these claims against observed financial and operational efficiency outcomes at the CGRC. Three different analyses are conducted: aggregate accounting measures are examined, financial ratio analysis is used for performance comparison, and operational efficiency is estimated through Data Envelopment Analysis. All three analyses decisively demonstrate that the CGRC has not only failed to reap the claimed cost savings and other financial benefits, but its fiscal performance has deteriorated sharply. In sum, the CGRC represents a clear case of NSW state government policy failure.