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Rural fire service trucks.

01 May 2023

Emergency Service Levy increase will be catastrophic for councils

The newly elected NSW Government has kicked off its first term in the worst possible way by sending NSW council budgets into meltdown, forcing them to shed jobs, close services and scrap infrastructure plans.

Councils’ peak body, Local Government NSW (LGNSW), said the decision to apply sky-high increases in the Emergency Services Levy (ESL) would be catastrophic for many councils, and could see some become insolvent.

LGNSW said that for some councils the unexpected cost hit would all but wipe out any IPART-approved rate rise, shredding budgets already under massive pressure from the combined impact of the pandemic, extreme weather events, high inflation and wage increases.

The ESL is a cost imposed on councils and the insurance industry to fund the emergency services budget in NSW. The majority is paid as part of insurance premiums, with a further 11.7 per cent picked up by councils and 14.6% by the State Government itself.

“The ESL is an absolutely blatant cost shift by the State Government,” LGNSW President Cr Darriea Turley AM said.

“To make things worse, the ESL has seen stratospheric increases year-on-year to make up for the Government’s unfunded workers' compensation liability for emergency services workers struck down by a range of cancers.

“Now it appears councils are being asked to fund massive rises in emergency services budgets, including a 73% increase in the budget allocation to the State Emergency Services (SES).

“The levy increase for the State’s 128 councils in 2023/24 alone sits just under $77 million.

“To put that in perspective, Hay Shire Council will immediately lose 88.6 per cent of its approved rate rise to the ESL, while Bourke Shire Council will lose 94%, Yass Valley Council will lose 96%, and Tenterfield will lose 119%.

“Hornsby council will lose about 75% of its approved rate rise.

“This is an alarming development coming late in the council budgeting cycle and well after the IPART’s rates determination for 2023-24.

“The effect will leave some councils with insufficient funds to cover cost increases in other areas. These costs will need to be met by cuts to staff and services.”

Cr Turley said the local government sector’s fight was not with emergency services workers, but with a duplicitous and financially unsustainable funding system.

“I’m seeking urgent talks with Treasurer Daniel Mookhey where I will ask him to work with councils to develop a fairer funding system,” she said.

“This shock increase comes at a time when council budgets are still struggling with flood and bushfire disaster recovery. 

“When you factor in the inflation and soaring costs we are all facing across the full gamut of our operations, the immediate future looks particularly bleak.

“We are urgently calling on the Government to:

  • restore the subsidy for 2023
  • unshackle this payment from council rates
  • develop a fairer, more transparent and financially sustainable method of funding the critically important emergency services that benefit us all.”