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In a potentially explosive development for the Baird Government, the Land and Environment Court has ordered it to provide documents about the role KPMG played in implementing the council amalgamation agenda.
Strathfield Council and others are seeking to amend their pleadings to allege a serious misrepresentation by the Baird Government after discovering that KPMG has been involved since at least July 2015.
A document seen by the Sydney Morning Herald entitled Options Analysis: Local Reform and marked cabinet in confidence was dated July 2015.
"OLG [Office of Local Government] has commissioned KPMG to support development of a robust evidence base to support the NSW governments Fit for the Future agenda," the document says.
This was well before the government announced the results of the Fit for the Future review by the independent pricing and regulatory tribunal which found that many councils lacked scale and capacity. It was also before the government announced its plans to force mergers and before the government announced KPMG would undertake a key report that analysed the financial benefits of each merger.
In a press release issued in on the day of the announcement of the mergers in January 2016, Premier Baird and the Minister for Local Government Paul Toole described the role of KPMG as "independent".
Counsel for Strathfield Tim Robertson SC said documents delivered on Sunday revealed KPMG had been "intimately involved in the formulation of proposals and the report had been done in order to do the government's bidding."
"The lack of independence of KPMG has always been a central part of our case," he said.
Counsel for the government Neil Williams SC opposed the notice to produce documents describing it as a " fishing expedition" and too broad.
But Justice Tim Moore said he would allow the discovery and would act as a filtration system on the documents. The government is expected to claim public interest immunity and cabinet in confidence on many of them.
The latest developments are politically damaging and could see the council mergers cases string out for months. While legally the government can probably remedy any flaws in the process by holding fresh public inquiries, evidence that it had acted to achieve a foregone conclusion and misled communities would make this difficult.
"If they had produced the proper background material none of this shemozzle would have happened," Save Our Suburbs convener Phil Jenkins said.
"It's all because of a basic failure to provide the KPMG report to the public. There will be a backlash against the whole LIberal Party, not just the Baird government because this is a breach of trust. I come from a conservative place - Hunters Hill. I have never seen anger like this in conservative places."
- This story was first published on The Sydney Morning Herald.