Cost shifting undermines financial stability of local govt

Published on 09 November 2018

Blacktown City Council is carrying the financial weight of $17,130,080 in State and Federal government costs each year, according to new research released this month.

The figure – which equals around 7% of Council’s rate revenue – contributes to a total of $820 million cost shifted onto NSW councils by the NSW and Federal Governments each year.

Blacktown City Mayor Stephen Bali MP said the latest Impact of Cost Shifting on Local Government in NSW report by Local Government NSW (LGNSW) showed that cost shifting by the NSW and Federal Governments was having a significant financial impact on Councils.

“Cost shifting occurs when state and federal governments force councils to assume responsibility for infrastructure, services and regulatory functions without providing sufficient supporting funding,” Mayor Bali said.

“It undermines the financial ability of councils to deliver the services and infrastructure communities need, by diverting funds that might otherwise be spent on roads and parks and playgrounds.

“The NSW Government is proud of its $3.9 billion Budget surplus, but at least 20% of that surplus is made possible by councils carrying a significant financial load for the State Government.”

Big ticket cost-shift items impacting metropolitan and regional councils included the waste levy, the emergency services levy; the increasing shortfall in library funding; pensioner rate rebates; and various regulatory roles delegated by the NSW Government.

“For example, the waste levy increased councils’ costs by 44% over a two-year period from 2013/14 to 2014/15,” Mayor Bali said. 

“The waste levy collected by NSW councils for the State Government totals more than $650 million per year, but only 18% is returned to councils to invest in their communities.

“Council-run public libraries in NSW receive less state government funding than in any other state or territory in Australia, NSW councils fund nearly half the pensioner rate rebate, which is fully funded by other State and Territory governments.”

Mayor Bali said Blacktown City Council joined all councils in calling on the NSW Government to commit to no new, increased, or transferred responsibilities to councils without a corresponding source of revenue.

Councils are also seeking:

Further details, including the methodology used in the cost shifting survey, are available in the full report at http://www.lgnsw.org.au/policy/cost-shifting-survey.