Overview of the amalgamation process

On 12 May 2016, the NSW Government announced the amalgamation of 42 councils into 19 new councils. There are several additional amalgamation proposals pending.

The amalgamation of councils is guided by provisions in the Local Government Act 1993. This process is outlined broadly below.

 

The below diagram shows that the LGNSW Amalgamation Toolkit can be useful during the Proposal, Transition and Implementation phases of amalgamation.

 

NSW Government Timeline

The formal proposal period commenced on 6 January2016. With the proclamations on 12 May 2016, 19 new councils have been created. The new councils are now in the Transition and Implementation Phases. Several additional proposals are still under consideration.

The Government has developed a guidance document for councils which are the subject of a merger proposal to begin preparing for a potential amalgamation. The document, Preparing for Change: Guidance for Councils, refers to the proposal period (i.e. the period during which merger proposals are being examined and reported upon) as the preparation phase. It provides guidance to councils wanting to prepare for a potential merger either by working individually or working together. The document also makes reference to an implementation phase, which would be the “period from which new councils are announced or proclaimed”. This timeline is illustrated in the diagram below.

A timeline showing the NSW Government's indicative amalagamtion timeframe including 'preparation' and 'implentation' phases.

In the early phases, the immediate focus of the merging councils should be on reviewing and consolidating assets, functions, resources, plans and processes in readiness for the new entity’s operation.

Key stages in Transition and Implementation

The approach to merging large and complex business enterprises needs to be well thought out, planned and executed, with all stakeholders, specifically employees, engaged in the process and fully aware of what is occurring, when, why and how. The importance of carefully planning the transition is considerable, as it will impact every aspect of the new entity’s structures, systems, culture and people - both in the short and longer term. At the same time, council and the staff will need to address 'business as usual tasks' and balance these tasks with transition activities.

Based on the reform experiences of other jurisdictions, there are four key stages in the amalgamation process. These are Review, Plan, Mobilise and Implement. These are outlined below in a generic way to assist preparation. However, given the NSW Government's announced timeframe, it appears that there may be a very short window between stages compared to that which other states have experienced.


This Toolkit provides practical guidance for this transitioning process, and the stages identified above and described below are intended as a general guide to the many tasks and considerations required to plan for and implement an amalgamation.

At the outset, it is important to understand that not every task will be completed when the new council commences and given the timeframes announced by the NSW Government this is particularly true. There is a tendency for people to leap into detail quickly during periods of change to gain control, but an important phase in the amalgamation process is determining the plan well. Merger tasks for different functional areas will occur at various paces, and the tasks and activities required will not necessarily occur in a linear timeframe. See the Day 1: Commencement Day Checklist (PDF, 255KB) for guidance on tasks that should be completed when the new council commences.

NOTE:

It may be that new councils will operate from Proclamation Day i.e. the day of announcement of the merging councils. While the steps or stages in the process are still the same, our toolkit was developed with the assumption there would be a period of review and planning before the commencement day of the new council. 

Some councils have already begun this early review and planning for a merger, either individually or working together. However, for many councils, the reality will be that some of the stages described below and throughout this Toolkit will likely occur after the new council is already in place.

There are definite benefits of getting as much preparation and planning done as possible before commencement of the new council, but with the likelihood that the new council will start on the date of the proclamation, in some cases there will be limited or no time for early preparation. This will introduce additional challenges for those leading the transition process, and it will be important to focus on and prioritise the areas likely to be most critical to a successful merger.

Overview of Stage 1 - Review

Stage 1 is focused on preparing for amalgamation and the degree to which this can be done will vary depending on the approach of affected councils. Some of the steps are:

  • Establishing a framework for managing the amalgamation process: The Stage will begin with confirmation of the governance structure for the project, development of an overarching Transition Action Plan and the establishment of specialist working groups. This will provide a clear and detailed ‘roadmap’ for the move to the entity, from initial stages through to operation.  If the merging councils have already started this process, they may need to revisit their agreed framework to ensure it is consistent with the details in the proclamation (once published).

  • Documenting the existing councils’ current state: There are various ways to do this and one way is for specialist working groups to identify, review and document all current council activities and information (i.e. processes, frameworks, policies, resources, databases and plans). The inventory of information collated will assist staff in understanding and determining the areas that require further analysis and planning, key risks, resources required and time frames necessary to complete the tasks effectively in readiness for Stage 2.

  • Commencing a process of due diligence, including capturing the costs and benefits of the merger.

Overview of Stage 2 - Plan

Stage 2 is focused on the analysis, consolidation and integration of ‘current state’ data from amalgamating partners, to inform decision-making and the development of key plans and strategies. The due diligence process continues, as well as the audit of services and service delivery, and consideration of interim staffing structures.

Leaders and working groups will commence preparation of combined policies and plans for their areas of responsibility:

  • For leaders of the amalgamation, this includes an Interim Operational Plan, a consolidated Operational Plan and a Commencement Day Plan.
  • Meanwhile, specialist working groups should combine their processes, plans and policies into consolidated documents in accordance with relevant legislation.

Overview of Stage 3 - Mobilise

In Stage 3, the focus moves from preparation and planning to implementation. The degree to which this can occur prior to proclamation will vary for different council groupings and will most likely occur post-proclamation. There will be an internal and operational period of 'transition' from that point.

The primary focus is on finalising arrangements and policies for the amalgamated entity, while operating on some interim systems.

At Commencement Day of the new entity, the organisation will be operating as once financially, but likely to be operationally managing with the separate councils' systems. It might be that a small amount of new systems and processes may also start being rolled out to support a smooth transition for customers and employees.

During this stage, the organisation will need to finalise how they can effectively operate as one council but with existing systems and also ideally determine the interim service delivery model and interim organisational and staffing structures.

Overview of Stage 4 - Implement

Stage 4 sees the new entity commence operation on Commencement Day (as determined in the proclamation), with acknowledgement of the effort and contribution made by all. Some steps will need to be implemented by Day 1 of the new entity (see Commencement Day Checklist (PDF, 254KB)) while other tasks will be implemented over a long changeover period. During this stage:

  • Financial reporting is as one entity, but operationally there may still be differences in place due to rating, systems and processes unique to an area.
  • The critical new and interim policies and processes are activated.
  • Amalgamating councils will carefully manage the changeover as the impact upon employees will be significant with the changes to their workplace environment. Increased communications and managing, as well as supporting the merging of different cultures and norms, is a key focus during the implementation stage and will require strong leadership and meaningful engagement with employees.
  • The interim General Manager or appointed General Manager will monitor customer satisfaction levels, the effectiveness of the interim service delivery model and the level of staff engagement.

This final stage is likely to extend for 3 to 5 years.

Overview of Key Milestones

The diagram below provides a summary of the four stages of the amalgamation process described in this Toolkit, with some indicative key milestones for each stage. It also illustrates the approximate alignment of these stages against the NSW Government’s timeline. (Note: The diagram is indicative only - Different activities will occur at various paces across all stages, and key milestones may vary from stage to stage for different councils, depending on how advanced they are in their initial preparation (review and planning) during the proposal period.)

Overview of this toolkit's four stages of amalgamation and key milestones for each stage. The diagram aligns these four stages with the 'preparation' and 'implementation' phases in the NSW Government's timeline.

The toolkit stages and key milestones diagram (PDF, 503KB) is also available in the 'Resources' list to download.