Local Government Reform

NSW State Government’s ‘Fit for the Future’ program

‘Fit for the Future’ is an initiative launched by the State Government in September 2014 to reform the NSW local government sector.  It is the culmination of three years of consultation between the Government and the Local Government Sector to look at a wide range of reforms to councils within New South Wales to help make them sustainable into the future. 

It is recognised that local councils have a vital role to play in shaping communities and helping them grow.  However the NSW State Government has also noted that the current system of local government is not working as well as it should be.  A TCorp report has identified that more than one-third of councils are facing financial problems.  An Independent Local Government Review Panel was established in April 2012 to examine the options for establishing a stronger and more effective system of local government within NSW.  The Panel produced its final report - Revitalising Local Government – in October 2013.  The report made a series of recommendations covering areas such as: 

  • Fiscal responsibility
  • Strengthening the revenue base
  • Meeting infrastructure needs
  • Improvement, productivity and accountability
  • Political leadership and good governance
  • Advancing structural reform, and
  • State-Local Government relations

The State Government took on board these recommendations and has responded with the ‘Fit for the Future’ initiative which is a $1 billion package of incentives to encourage councils to look at ways to ensure that they are sustainable into the future.  Councils are being requested to look at their current situation and consider the future needs of their communities. 

Councils are now required to prepare a submission by 30 June 2015 that will be assessed by an independent expert panel which will make recommendations to the Minister of Local Government for final implementation.  

It is envisaged that the outcome of these recommendations will become operative as of the September 2016 local government elections.


The Independent Local Government Review Panel has stated that it ‘identified a number of cases where it believes there could be merit in an amalgamation of councils around a regional centre’.  The Panel went on to note that these options warrant further investigation for one or more of three reasons: 

  • To create a regional centre with the necessary scale and capacity to anchor a Joint Organisation (eg. Deniliquin – Murray – Conargo).
  • To reflect close functional inter-relationships (eg. Over-spill development, commuter catchments, service provision) between a regional centre and adjoining council areas (eg. Orange-Carbonne, Queanbeyan-Palerang, Albury-Greater Hume, Dubbo-Narromine-Wellington).
  • As an option for adjoining ‘councils at risk’ (eg. Wagga Wagga-Lockhart, Griffith-Murrumbidgee, Bathurst-Oberon, Armidale-Guyra).

Proposal for Lithgow

While no amalgamations or boundary changes are proposed for Lithgow at this stage the Panel sees stronger regional cooperation as a central piece of local government reform. It is believed that this will enhance the role of councils and facilitate more productive State-local relations, especially in strategic planning, economic development, infrastructure provision and service delivery. Thus the Panel’s objective is to create a robust but flexible framework within which councils can negotiate the establishment of statutory regional organisations that will undertake strategic planning and other joint activities, and provide a platform for much more extensive and effective State-local dialogue and cooperation.

In Future Directions the Panel proposed that the existing County Council provisions of the Local Government Act, suitably amended, could be used to establish the stronger regional entities it had in mind. Those proposals were not well received by local government, due largely to perceived problems with the current legal framework for County Councils. The Panel has therefore developed a substantially modified set of proposals for what it now terms ‘Joint Organisations’.

Community engagement

Council has and continues to engage with the community in order to make an informed decision on the most fitting FFTF recommendations and strategy for Lithgow and will continue up to June 2015.

Previous Council Submissions

Council provided two submissions to the Independent Panel emphasising that Lithgow Council is financially sustainable, is fiscally responsible and continues to meet the needs of the community. 

Neighbour Discussions

Lithgow Council met with neighbouring councils, Bathurst Regional and Oberon, to discuss the NSW Government’s FFTF reform agenda and discussed potential opportunities for working together on Fit for the Future proposals, with the premise that it is opposed to merging into one council.

What are the principles that underpin Fit for the Future?

In undertaking its work the Independent Local Government Review Panel (ILGRP) advocated that it is critical to build a sustainable system of local government within NSW if councils are to adequately deliver services and infrastructure to their communities into the future.  The Panel identified a number of key principles which underpinned their final recommendations.  The first of these related to defining the ‘essential elements’ of a more effective system of local government.  These are: 

  • Councils with the scale, resources and ‘strategic capacity’ to govern effectively and to provide a strong voice for their communities.
  • Maintenance of a strong sense of local identify and place.
  • Councils with an adequate revenue base (own source or grants) relative to their functions, healthy balance sheets, and sound financial management.
  • Councils renowned for their efficiency and focus on outcomes, based on the Integrated Planning and Reporting framework.
  • Regional groupings of councils that share resources on a large scale and jointly plan and advocate for their regions.
  • Councils that have highly skilled mayors, councillors and executive teams; and are respected by the State government and community alike.
  • Mayors who are recognised leaders both within the council and throughout the local community, and enjoy a positive reputation for that leadership.
  • An electoral system designed to ensure that as far as possible councils are representative of the make-up and varied interests of their community.
  • A Local Government Act that minimises prescription and provides a range of options for the way councils and regional bodies are structured.
  • Effective mechanisms for State-local consultation, joint planning, policy development and operational partnerships.
  • A local government association that is focussed on strategy; a well-informed, dynamic advocate; a leader in reform; and a trouble-shooter.
  • A constructive relationship between employers, employees and employee organisations, focussed on improving productivity, performance and rewards.

The Panel also saw it as critical for councils to possess more ‘strategic capacity’ so that they can be ‘fit for purpose’.  They identified the following key elements for achieving strategic capacity:

  • More robust revenue base and increased discretionary spending.
  • Scope to undertake new functions and major projects.
  • Ability to employ wider range of skilled staff.
  • Knowledge, creativity and innovation.
  • Advanced skills in strategic planning and policy development.
  • Effective regional collaboration.
  • Credibility for effective advocacy.
  • Capable partner for State and Federal agencies.
  • Resources to cope with complex and unexpected change.
  • High quality political and managerial leadership.

The NSW Government has endorsed these underlying principles and sees them as critical for councils to possess if they are to be ‘Fit for the Future’.

Community Submissions

Submissions by the community can be made by the community up until Friday 1 May 2015. Submissions should be addressed to Lithgow City Council at PO Box 19 Lithgow NSW 2790 or council@lithgow.nsw.gov.au

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Council’s Submission

Other relevant documents

Frequently Asked Questons

What is the most recent announcement by the state government concerning local government reform?
The State Government intends to proceed with structural reforms for local government as recommended by the Independent Local Government Review Panel. For our region, the Panel recommends that Lithgow Council standalone but be a member of the Central West Joint Organisation.

What is the timetable for structural reforms?
  • Each council is to review their current situation through a self-assessment tool
  • Each council to participate in discussions with neighbouring councils and make a proposal to the NSW State Government by 30 June 2015
  • An Expert Panel will review each council's proposal and make recommendations to the Minister for Local Government
  • Councils who are assessed as 'fit for the future' will begin to implement changes.
  • It is envisaged that the outcome of these recommendations will become operative as of the September 2016 local government elections.

What are the criteria set out by the NSW State Government?

The Independent Pricing and Regulatory Tribunal (IPART) conducted a review of the criteria announced within the FFTF package and recommended that 'scale and capacity' are the threshold criteria by which the Councils future will be judged.

What funding is available to councils?

The State Government announced $1 billion dollars in funding to local government in NSW.

Councils identified as fit for the future will receive financial incentives. The financial incentives set out by the State Government are as follows:

  • The NSW State Government has offered one off funding totaling $258M to Councils who voluntarily amalgamate. This is broken into two funds, one for metropolitan councils and the other for rural councils. Regional councils that voluntarily merge will receive up to $13.5M for the new council. This is made up of $5/$11/$13.5M for groups of 2/3/4 or more merged councils
  • The Government has also offered $5.3M to establish the regional Joint Organisations
  • In addition, the State Government will provide access to amalgamated councils to a lower interest rate on loans that it estimates will save local government $600M across the State over the next 10 years. Councils that do not amalgamate will not have access to this cheaper financing.

Does Lithgow Council support the recommendations from the Independent Panel Report?

Lithgow Council generally supports the recommendations put forward by the NSW Independent Local Government Review Panel in April 2014. The recommendations generally relate to the following topics:

  • Fiscal responsibility
  • Strengthening the revenue base
  • Meeting the infrastructure needs
  • Improvement, productivity and accountability
  • Political leadership and good governance
  • Regional Joint Organisations
  • State-Local Government relations

What is Lithgow’s position in relation to forced amalgamations?

Lithgow Council has resolved to oppose forced amalgamations. The most recent resolution here was 17 November 2014 Resolution No. 14-456.

Who will make the decision about the change?

As part of the Fit for the Future process councils were recommended to have discussions with their neighbouring councils. The Office of Local Government has advised that it will only accept proposals that have joint agreement of all the affected councils in that merger. No one council can put forward a proposal of merging/amalgamating with neighbouring councils. These submissions are due 30 June 2015. Each submission will be assessed against the criteria set by the NSW State Government and will be reviewed by an independent panel.

Is Lithgow Council financially sustainable?

Yes. In 2013 the NSW Treasury Corporation (TCorp) released their analysis of the financial sustainability of the NSW Local Government Sector finding Lithgow Council to be in a sound financial position.

Where can you get further information from?

The Office of Local Government has a website dedicated to the process. Information can be obtained from: