Local government’s financial autonomy is ebbing away, despite councils being good with money, says Dr Marcus Spiller, founding partner of SGS Economics and Planning.
He addressed the 30th National General Assembly of Australia’s local councils in Canberra last week.
Spiller said more than half of NSW councils’ own-source revenue was below the benchmark of a minimum of 60 per cent, a benchmark set by the NSW Office of Local Government.
Ten years ago, fewer than 30 per cent of councils fell below this minimum standard and councils typically raised between 70 per cent to 80 per cent of their revenue from their own sources.
But growth in own-source revenue in local government had flatlined in the past five years, Spiller said, growing at four per cent compared to the state growing at 5.2 per cent and the Commonwealth growing at eight per cent.
Own-source revenue includes any money the council raises itself such as rates and fees and charges.
Central Coast Council does not fall below the benchmark.
The financial report tabled at the June meeting showed the Coast was at 85.8 per cent at the end of May.
Spiller said there was a growing tendency for the Commonwealth Government to influence the spending decisions of other tiers of government with the rise of tied and competitive grants.
He said this was problematic for local councils for two reasons.
First, it made it difficult for councils to align resources to community priorities and second, these grants involved an unwanted additional cost burden from compliance and reporting requirements.
Spiller, an Associate Professor at the University of Melbourne and Life Fellow of the Planning Institute of Australia, outlined the case for reform.
He said rate capping needed revisiting; untied grants would cost councils less and councils needed more from the Commonwealth.
He said putting local government on a sustainable financial footing would largely pay for itself.
Once efficiencies and savings were embedded, they would boost GDP by more than $7B a year which would lift Commonwealth tax revenues by around $1.7B a year.
A major theme at the conference was the size of the annual Federal Assistance Grants (FAG) the Federal Government pays councils.
The Australian Local Government Association (ALGA) voted at the conference to continue its campaign to get the government to increase the FAG from 0.55 per cent of the Commonwealth Taxation Revenue to one per cent.
The FAG has been reducing over 25 years.
ALGA president Linda Scott said the government missed its chance to follow through on its pre-election promise of ‘fair increases’ to the FAG and the conference was an opportunity for councils to come together and send a clear message that councils needed immediate action.
Merilyn Vale
This article was made possible with the support of the Industry Association; Local and Independent News Association LINA