A new report for Local Government NSW (LGNSW) shows ratepayers are paying almost $500 of their council rates to State Government cost shifting.
The association has worked out that each ratepayer is paying an average of $497.40 to things such as rates exemptions for State Government owned businesses; the waste levy; and payments to the emergency services levy.
On top of that, charges for some Council services such as development applications are legislated by the State Government and don’t cover the cost of providing the service.
And library funding, which used to be 50% funded from the State, is down to 6%.
LGNSW says there are multiple smaller and emerging cost shifts.
The 2023/24 Cost Shifting Survey revealed $1.50B in 2023/24; a 10% increase from the last survey of $1.36B in 2021/22.
It defines cost shifting as a situation where the cost of providing a service, concession, asset, or regulatory function is imposed on local government from either the Commonwealth or State without the corresponding funding or revenue raising capacity.
Central Coast Council did not participate in the latest survey but has previously done so and agrees with the comments from the LGNSW that cost shifting from both state and federal governments onto local councils is putting an enormous strain on councils and ratepayers.
CEO David Farmer said that local government through its rates, collects just 2.9% of the total taxation collected in Australia but the expectations of communities is for local government to deliver at the coalface.
He said in NSW in particular, with rate capping, when additional costs were pushed down from other levels of government, councils had no choice but to trim other services to accommodate that.
“Central Coast Council, as is the case with many other LGAs, simply cannot be expected to continue to foot the bill for a growing range of state and federal functions and services – which were never factored into our fixed rate base,” Farmer said.
“The estimated average figure of $500 per ratepayer being diverted from the many local priorities, is impacting on what Council can deliver.
“Our ratepayers have continually told us what their priorities are – and it is unfair that some of the rates collected are being used to fund both state and federal responsibilities,” Farmer said.
The LGNSW President Phyllis Miller said councils faced unprecedented financial strain and warned the practice of cost shifting – overwhelmingly from the NSW Government – must end.
“Councils are at breaking point. The combination of relentless cost shifting, rate capping and inadequate state and federal funding is eroding the sector’s financial sustainability,” Miller said.
“Councils are having to foot the bill for state and federal functions and services that they didn’t design and aren’t funded to deliver,” she said.
“This includes the collection of the NSW Government’s Waste Levy and payment of the Emergency Services Levy, and the huge shortfall in funding for our beloved libraries.
“There’s also the significant loss of income when councils aren’t allowed to charge rates on certain properties even though they are big users of council services,” Miller said.
She called on the NSW Government to commit to genuine reform, including regulatory changes, proper budget support, and fair funding.
Merilyn Vale
