State governments used to fund 50 per cent of library costs, but now only fund 6 per cent. Photo: Joe Crawford/Flickr.
State and federal government ‘cost shifting’ on councils is costing ratepayers an average of $500 a year and threatening the future of services such as regional town libraries, says a new report commissioned by representative body Local Government NSW (LGNSW).
Historically, the state and federal governments have subsidised the cost of running council assets and services, such as parks, libraries, galleries, events and rubbish collection.
But the report by consultants Morrison Low, released on Wednesday (9 July), argues that state and federal governments have gradually reduced their financial support for councils while also imposing higher levies on local government to pay for things such as emergency services and waste removal.
“An example of this is libraries, where the original commitment from state government was to fund up to 50 per cent of libraries’ cost for many councils,” the report states.
“It now covers approximately 6 per cent of the total costs, leaving councils to fund an additional $181.8 million to make up the difference.”
The report argues that councils are left with the choice of either continuing the service and taking on the burden of the cost or ceasing the service entirely.
Over the past two years, Griffith, Leeton and Narrandera councils have sought to apply to the state regulator to allow them to substantially increase rates – identifying ‘cost shifting’ as a key reason for the need to do so. The rate hikes were approved in Griffith and Narrandera but voted down in Leeton.
Bega Council also implemented a rate hike of 24 per cent in 2023/24 and 19.6 per cent in 2024/25 and recently proposed yet another increase.
“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,” Forbes Mayor and LGNSW President Phyllis Miller said.
“Councils are having to foot the bill for state and federal functions and services they didn’t design and aren’t funded to deliver.
“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.”
The report said councils across NSW were now absorbing $1.5 billion in cost shifting from state and federal governments each year and a cumulative $11.3 billion over the past decade. That equated to a cost of $497.40 per ratepayer.
Cr Miller said this money was being diverted from essential local priorities such as roads, libraries, sporting facilities and community programs.
“These are services our communities need, want and deserve, and they’re being severely compromised by councils needing to pick up the bill on behalf of the state,” Cr Miller said.
Original Article published by Oliver Jacques on Region Riverina.
