The following is an edited extract from a paper by John Rolfe, Professor of Regional Economic Development at CQU.

The full paper can be accessed on the web.: http://www.isrd.cqu.edu.au/FCWViewer/getFile.do?id=5632 .

...... In this world, the challenge in setting shire boundaries is to establish which combination of population and areas is best able to meet future demands and regional development goals.   An appropriate way of evaluating the options is to identify the costs and benefits involved in moving from the current allocation of shire boundaries to revised options.

In a regional development framework, the case for amalgamations relates to current or past growth patterns, meaning that the original local government boundaries no longer reflect the underlying commercial, demographic and service patterns in the community.   Current growth pressures can justify amalgamations where there is strong economic development and population growth, particularly when impacts of development spill across adjoining shires.

The other regional development area where there may be a strong case for amalgamation relates to shires serviced by a particular regional hub or economic centre.   In these cases, growth and development over a long period of time has changed the underlying community structures.   There are many areas where business and demographic patterns have changed to reflect new transport, communication and lifestyle patterns, and where larger townships essentially have become economic, service and administration hubs for sub-regional areas.   Amalgamations will help to realign administrative boundaries to match these economic and service developments. 

In an economic viability framework, the 2 groups of issues to consider are cost efficiencies and economies of scale.   Some amalgamations may be appropriate where substantial cost-efficiencies are available from actions such as reduced administration and duplication of services.   The ‘doughnut' shires, where the town is administered by one council and the surrounding area is administered by another, are one potential set of shires where amalgamations may generate efficiencies.   The economies of scale arguments are particularly relevant to the smaller shires where a low economic and population base are constraints on the operation and development of the local government authority.

This analysis suggests that there are 4 situations that should be considered for amalgamation in a regional development or economic viability context:

- Shires in high growth areas where the growth currently impacts across shire boundaries (these are mostly shires in growth regions along the Queensland coast),

- The regional centre shires where a regional hub is the economic centre of more than one local government area (amalgamation will align administrative structures more closely with business and demographic patterns),

- The doughnut shires where there may be currently separate councils for the township and the surrounding region (as both areas rely on the same economic drivers there are likely to be benefits in consolidating administrations),

- The smaller shires where a limited population and economic base currently limits the efficiency and viability of operations.

The potential costs and tradeoffs involved still need to be considered in these 4 key areas where there may be an economic justification for amalgamation to occur. The types of  offsetting  costs and tradeoffs to be considered include some increased transaction and administration costs, social impacts on communities, reductions in communication, and concerns about the loss of enfranchisement and leadership.

Other key justifications for amalgamations include increased specialisation of administration and operations, better matching with economic patterns where business hubs or regional centres had developed, and the need for more coordination and strategic planning in areas experiencing economic development and population growth. In areas where these factors do not apply, a focus on cost-efficiencies may not be sufficient to justify amalgamations.