CLAIR Forum
The CLAIR Forum is an annual one-day
seminar organised and sponsored by the Japan Local Government Centre
(CLAIR, Sydney). It was inaugurated in 1995 to provide an opportunity
for Australian and New Zealand government officials and academics
to exchange knowledge and ideas with other peers and visiting experts
from Japan on a topic of mutual interest. The Forum is held in a different
city each year and attracts 50-150 delegates.
CLAIR
Forum in Perth WA
-SUMMARY-
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The forum called on various
speakers from a variety of organizations to present their experiences
and view on amalgamations.
Opening greetings were given by Mayor David Boothman, City of Stirling,
Mr. Hiroshi Ueda, Senior Managing Director, CLAIR Tokyo, Mr. Torao
Sato, Consul-General of Japan in Perth, Ms. Jennifer Matthews, Director
General, Department of Local Government (On behalf of Minister for
Local Government Hon. John Castrilli MLA), and Cr. Bill Mitchell,
President, WALGA. Approximately 70 people participated in the CLAIR
Forum.
A summary of the key speeches and Q&A session is as follows.
Mr. Ikeda provided an overview of the local government structure
in Japan and provided a background to amalgamation in Japan.
- Japanese local government includes prefectures and municipalities.
- Japanese municipalities have a greater role than their Australian
counterparts including resident registration, fire & ambulance,
and primary and middle school education.
- A Japanese municipality has a Mayor (with executive power) and a
separate Assembly (which has legislative power).
- Local Allocation Tax (LAT) is distributed to municipalities by the
central government to ensure a similar standard and quality of services
throughout the nation.
- To provide necessary services, (particularly in the case of small
councils) municipalities may form cooperatives; sign a contract with
another council or two or more councils may create a separate joint
agency.
- The latest move towards amalgamations began with the Municipal Amalgamation
Law of 1999, amended 2005.
- Amalgamation is achieved voluntarily stating with an Amalgamation
Consultation Committee. Once a resolution is reached, it is presented
to the prefectural government, and then reported to central government,
where the amalgamation is publicly announced.
- Measures have been used by the central government to encourage amalgamation,
such as extending the terms or numbers of Assembly members and guaranteeing
previous LAT funding formulas for a certain length of time after amalgamation.
Prof. Konishi spoke of the decentralization movement in Japan, and
related issues.
- The number of municipalities was reduced by almost half in the
great amalgamation of the Heisei Era. The rate of reduction was greater
for smaller municipalities.
- While the past two great amalgamations were a result of reform of
the system of local government, the great Heisei amalgamation was
influenced by decentralisation reform and worsening local public finances,
especially in smaller municipalities.
- Japanese decentralisation reform under the Koizumi government was
aimed at achieving small government, however, the current aim of the
DPJ government is medium to large government.
- The aim of municipal amalgamation is to enhance local government
capacity to undertake duties allocated to municipalities.
- One of the reasons for municipal amalgamation is that municipalities
are allocated with almost the same roles and responsibilities regardless
of the size of the population, except in the case of some major cities.
As a result, small towns and villages are significantly disadvantaged
in fulfilling their responsibilities.
- Municipal amalgamation was thought to be necessary to overcome financial
crises in most local governments.
- The system of local allocation tax at the core of the Japanese system
of local public finance is a mechanism for guaranteeing financial
resources. This means even municipalities with limited tax revenue
are able to perform their duties. However, as financial resources
are not guaranteed in full in the case of debt repayments, it is easy
for small municipalities with low tax revenue to slip into over-borrowing.
For that reason, drastic cuts in local allocation tax create a tendency
for small municipalities to get into financial difficulty.
- Financial crisis in small municipalities is the reason the great
amalgamation of the Heisei Era progressed.
- The benefit of amalgamation is that the municipality becomes larger
and comes into balance with its allocated duties and authority, however
it takes time for it to function as a unified single local government.
- In light of local government reform, it is a necessity for councils
to become more sustainable and to stay relevant to the communities
they represent.
- Prime Minister Kevin Rudd’s agenda for local government includes
a revitalized COAG with renewed focus on results based funding from
the federal government. This included the establishment of several
working groups (such as health and ageing, climate change and water)
– a number of which have local government representation. Aside
from COAG, the PM’s agenda includes Infrastructure Australia
and Major Cities Unit, Regional Development Australia, and the Australian
Council of Local Government.
- We have seen a new phase of financial crunch – as a result
councils have faced difficulties as the belt has been tightened and
GIAs have been affected.
- Various reforms have been seen over the last three decades. Victoria’s
amalgamations in the 1990s were driven by a business-led philosophy
of new public management and service efficiency, while Queensland’s
reforms are about the challenges of local government facing the world
– including metropolitan and coastal growth , climate change,
sustainable development, while having financially resilient, efficient
and powerful councils of sufficient scale.
- The New England Strategic Alliance has been a failure as an alternative
to amalgamation due to flaws in structure, management and common will.
- It is vital for councils to build ‘strategic capacity’
as a valued partner in the system of government.Mr. Graham mentioned
that this is what ACELG is all about.
Mr. Brun spoke of the amalgamation between the City of Geraldton
and the Shire of Greenough.
- Prior to amalgamation, the Shire of Greenough (population of 7000),
and the City of Geraldton (20,000) had a close relationship, with
residents of Greenough using Geraldton as their town centre, while
Greenough owned the Geraldton airport. The boundary of Greenough ran
through Geraldton’s urban surrounds.
- Amalgamation was first proposed in 1998, rejected, but took affect
in 2007 after a renewed push.
- All points agreed on have been honoured, including an internally
elected mayor.
- The merger has not reduced costs or staff.
- However, with more capacity, the new council is able to provide
greater services, in particular in compliance, and tourism (which
was hardly enacted before). Geraldton has amazing assets but had no
capacity for the promotion of tourism pre-merger. It now has 20 cruise
ships docking each year (from zero).
- Mr. Brun noted that Geraldton-Greenough is now getting more attention
than larger areas (such as Bunbury which is split by 4 councils).
- Mr. Brun mentioned he would like to see a new sense of government
from mergers, with a structure of metropolitan governments (i.e. metropolitan
Sydney and Perth); regional government; and shires, instilling a sense
of identity, community and the ability to get things done.
Mr. Niitsu told the story of an amalgamation in Yamanashi Prefecture,
Japan, from conception to the birth of Hokuto City.
- In line with the rest of Japan, the number of municipalities in
Yamanashi dropped greatly during the Great Showa amalgamation and
the Great Heisei Amalgamation (particularly 2004-05)
- 7 towns and villages (with populations of less than 10,000) established
the Kyohoku Amalgamation Promotion Committee in 2002 – Akeno
Village, Sutama Town, Takane Town, Nagasaka Town, Oizumi Village,
Hakushu Town, and Mukawa Village. At this time these towns were involved
in several cooperatives.
- Some difficulties in choosing a name, as well as obtaining support
from some of the towns were faced, but outcome.
- Hokuto City was proclaimed on 1 November 2004.
- Neigbouring Kobuchisawa Town, who’s mayor was against amalgamation
retired in 2005 and a new pro-amalgamation mayor was elected without
vote. Kobuchisawa Town was amalgamated by acquisition in 2006 and
a new Hokuto City was born.
- Amalgamation was deliberated on by a committee system with mayors,
assembly chairpersons and reps from each town or village.
- PR was an important factor in gaining community support.
- The new city aimed to encourage staff to be proactive and independent
- In terms of funding, Hokuto City received 510 million yen, and 1
billion yen from the prefectural government, as well as special advantageous
bonds of 29 billion yen, and Normal local allocation tax, at 700 million
over 5 years and Special allocation tax of 700 million over 3 years.
- Post-amalgamation – the number of assembly members dropped
from 115 to 22. The number of staff fell approx. 15% from 675 to 577.
The hospital and school previously ran by the cooperative were now
operated directly by the new Hokuto City.
- The amalgamation allowed for new opportunities – such as a
photovoltaic test site and the building of a crematorium. New local
committees were set up for residents to voice their opinions.
- Japanese municipalities have the need to increase their roles to
improve administrative services while ensuring community autonomy.
- The road to amalgamation has been bumpy with merger discussions
on-going since 1945. The Town and Shire of Northam merged in 2007
triggered by a report recommending amalgamation commissioned in 2005.
- The merger was supported based on economic and service benefits,
including a reduction in staff and elected members, as well as the
provision of state government financial support for the merger expenses,
and a guarantee of aggregate grants funding for 5 years.
- After the merger year to year cost savings of $422,256 were achieved.
- Due to a short time frame between the announcement and the actual
merger (2 months) and due to the changes, there were difficulties
in staff adjusting and turn over was higher post-merger
- However by the reorganization and consolidation of staff a number
of service improvements were able to be achieved, such as engaging
ranger services
- Merger happened on own terms (there was a fear if not then the state
government would force amalgamation) with meant increased support
from community and councillors
- A community was created to design a new logo to represent both former
local governments
- The growing population and increased expectations have placed more
pressure on the Shire to improve facilities as the community expects
equal access to quality facilities
- The new Shire has increased engagement with community groups by
way of public meetings
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- Panel Discussion/Q&A facilitated by Mr. Anthony Quahe
The panel included:
- Ms. Jennifer Matthews, Department of Local Government
- Prof. Graham Sansom, ACELG
- Steven Pollard, Shire of Northam
- Tony Brun, City of Geraldton – Greenough
- Prof. Sachio Konishi, Kwansei Gakuin University (with interpreter)
- Mr. Osamu Niitsu, Yamanashi Prefectural Government (with interpreter)
A summary of issues discussed in the panel discussion/Q&A session
included:
- Cases in Japan where large municipalities are split - Mr. Niitsu
explained this was rare but sited a case in Hokkaido.
- Public reaction to amalgamations in Australia - Mr. Pollard mentioned
that in Northam initial resistance was soon overcome by acceptance.
- Whether Australia should give greater thought to giving greater
funding to local councils to provide services (like the Japanese funding
model) and about the possibility of constitutional recognition of
local government in Australia - Prof. Sansom sited large differences
between Japan and Australia does not make him optimistic about constitutional
recognition of local governments here. He mentioned that as Japan
is a unitary state it is much easier to delegate powers. However he
did suggest we can do more in Australia as part of an overall reform
process to discuss state and local government relationships.
- Increased remunerations for elected members in post-merger larger
municipalities in Japan – Mr. Niitsu responded that city councilors
are paid more (almost double) than councillors in towns/villages.
In Hokuto such increases post-merger have been implemented incrementally.
- The financial sustainability of local government – Mr. Brun
suggested this is a separate issue not solved by mergers. Mergers
provide opportunity for better services, such as tourism and energy.
Ms. Matthews, while noting financial sustainability is one issue,
she stressed the importance of strategic capacity to provide better
outcomes to the community.
- Effectiveness of grants for amalgamation – are they enough,
and are they an incentive? Mr. Pollard mentioned the grant received
by Northam covered the cost of relocation and computer technologies.
Prof. Konishi spoke of financial incentives in Japan and while many
were offered, incentives such as advantageous bonds caused further
financial imposition for municipalities already in a position of over
borrowing. Amalgamations are costly and finances to cover the cost
of amalgamation with some left over are required. Tony Brun mentioned
in the government is serious they will put forward amalgamation incentives
of 400-500 Million dollars over 4-5 years.
- Effectiveness of joint agreements for economic drivers such as tourism
– Mr. Brun responded these do not work.
- Japan – what happened to councils that did not merge? In the
early 2000s PM Koizumi’s policy was to reduce funding to local
governments. Many of them ended up merging. Councils that didn’t
merge tried to overcome over borrowing by not issuing new bonds and
reducing administration expenses and public works.
- Joint-agreements – effectiveness in general? Prof. Sansom
mentioned they can produce good results within limited boundaries.
Mergers and amalgamations have a role to play and need to be examined
in areas which yield strategic benefits and justify the costs involved.
Where only marginal benefits are to be gained, then mergers are probably
not worthwhile.
- Regional Transition groups and due diligence – Ms. Matthews
discussed that the RTG model, whereby a regional business plan is
completed provides a basis for determining the benefits derived from
amalgamation and the costs involved, important for when applying to
the state government for funding.
- Over borrowings and Japanese municipalities – what happens
when they cannot repay? Prof Konishi explained that the central government,
while not taking full financial responsibility, will supervise a repayment
plan.
- Proposing a functional reform model as an alternative to amalgamation
- Japan’s experience of cooperation and resource sharing. Konishi
explained how contractual agreements are effective and have been used
since pre-amalgamation days, however don’t solve all problems.
Amalgamations and cooperatives are both needed and are not mutually
exclusive.
- Whether the state has put aside funding for amalgamations –
Ms. Matthews explained that the Minister is in discussions with treasury
and is expecting a response in May. It is recognized that a significant
amount of funding is required. In QLD $27m was put aside for the voluntary
part of the amalgamation process.
Closing
Closing remarks were then made by the facilitator Mr. Anthony Quahe
and by Director of CLAIR, Mr. Kenji Ikeda, thanking all attendees
and speakers.
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