Media Release: Government cost shifting onto councils tops $670 million

11 Dec 2015
NSW councils are bearing an additional burden of more than $670 million each year as a result of cost-shifting from the State and Federal Government, a new report has found.
The Local Government NSW Cost Shifting Survey, conducted every two years, has identified some $670 million in costs passed on to councils – primarily by the NSW Government - in the 2013/14 financial year.
The practice – known in Canada as “offloading” and in New Zealand as “community subsidisation of central government” – involves one sphere of government shifting responsibility for services, assets or regulation to another sphere without providing sufficient funding to support the shift.
And the report has found the cost-shifting burden borne by NSW councils has increased by $88 million since the last survey, which covered the 2011/12 financial year.
“One of the greatest ironies is that we’re able to quantify this figure on the same day that the NSW Government is off arguing against federal-state cost-shifting at the Council of Australian Governments (COAG),” LGNSW President Keith Rhoades said.
“It certainly seems that what is good for the goose is not good for the gander in this case.
“These latest cost-shifting figures come hard on the heels of the IPART announcement of the tiny 1.8% rate cap, and illustrate the ever-increasing financial squeeze on councils in NSW.
“What we’ve got is a real triple whammy: a rate peg of just 1.8%, cost-shifting to the tune of more than $670 million each year, and on the federal front, a freeze on the indexation of Funding Assistance Grants that is costing the NSW local government $289 million.
“So it’s more than a bit rich that councils – even the majority who met the financial benchmarks set by the NSW Government – have been unfairly labelled not fit for the future and are set to be forcibly amalgamated.
“It’s not the councils that are broken, it’s the funding system they’re forced to work under.”
Cr Rhoades said the Government’s arguments that amalgamations would financially strengthen councils were a complete furphy.
“Amalgamating two financially squeezed councils just results in one large council under even greater financial stress,” he said.
“LGNSW has argued throughout the entire reform process that we need to fix the funding first - well before we start worrying about developer driven structural reform via council amalgamations.
“This new data on cost-shifting is powerful reason for the State and Federal Governments to stop asking councils to keep doing more and more with less.
“And if they’re serious about strengthening local government and communities in NSW, they’ll start by resolving the systemic funding issues that bedevil councils, not by spending taxpayers’ money forcing amalgamations.”
The full report, including a breakdown of participating councils, is available to review here.
Media Enquiries
LGNSW President, Cr Keith Rhoades AFSM: 0408 256 405
Media Toni Allan 0412 774 441