Local Government NSW released a new report on ‘cost shifting’ last week and the Country Mayors Association of NSW (CMA) has reiterated their frustrations and the fact that the impacts are more deeply felt in rural, regional and remote communities.
Cost shifting is the terms given to the offloading of cost burdens by State and Federal Governments onto already cash starved Local Government.
The report: “Cost Shifting 2025: How State Costs Eat Council Rates” was prepared by independent consultants Morrison Low. It showed a 10 per cent increase in cost shifting in three years. It further detailed how Councils across NSW are now absorbing a staggering $1.5 billion in cost shifting from State and Federal governments each year – a cumulative $11.3 billion over the past decade. The report indicated that the cost breaks down to $500 per ratepayer per year.
“On behalf of our CMA Board, together with our 92 rural, regional and remote Members, I extend our congratulations to our sister organisation LGNSW. It is important that our Governments and communities understand the big picture impacts of adding to our expenses, in a time of inadequate funding for rural, remote and regional communities,” CMA Chairman and Temora Shire Mayor Rick Firman OAM said.
“The figures are not surprising but they are disturbing and hopefully enlightening, as unprecedented operational cost increases in recent years and constrained income growth make financial sustainability a mission impossible for some.
“It is clear that the impacts of cost shifting are bigger barriers to financial sustainability for non-metropolitan Councils. Some of our rural and remote members have a small rate base that is essentially stagnant or even declining. Over 70 percent of some country Councils’ revenue is grants, but that varies annually and the Federal Government’s (untied) Financial Assistance Grants are half of what they once were. We will continue to lobby the Federal Government to return them to one percent of national taxation revenue, as we work to raise awareness of the ever-growing demands on rural, regional and remote councils in NSW.”
Mayor Firman said that while CMA members feel the brunt of cost shifting and funding reduction impacts, he is optimistic that the NSW Government will make some positive decisions in the near future.
“The NSW Government’s Public Accounts Committee handed down some appropriate recommendations after its’ “Inquiry into the assets, premises and funding of the NSW Rural Fire Service”.
“As one of the most inexplicable examples of cost shifting, our Member Councils in NSW are forced by the State Government to wear the financial impacts of having Rural Fire Service Assets on their books, despite not actually owning them. The ‘Red Fleet’ is something that the CMA has lobbied intensively on and we acknowledge the NSW Treasurer the Hon. Daniel Mookhey MLC, NSW Emergency Services Minister the Hon Jihad Dib MP and NSW Local Government Minister the Hon Ron Hoenig MP have been working hard on resolving the issue.”
Mayor Firman recalled that Country Mayors were underwhelmed with the recent (seemingly western Sydney focused) State budget.
“It saw further funding cuts to local galleries and other valued community services, meaning many of our Member Councils will carry more financial responsibility, regardless of their capacity to absorb the costs that the State Government saves.
“The Transport for NSW reclassification program is also to be commended. With that, we could see a good number of road maintenance burdens dumped onto Councils go back into State Government management,” he said.
Deputy Chairman of the CMA and Bega Valley Shire Mayor Russell Fitzpatrick said that inadequate Financial Assistance Grants from the Federal Government have many flow-on impacts for rural, remote and regional communities.
“Cost shifting and insufficient Financial Assistance Grants have forced Councils to apply for Special Rate Variations, seeking increased rates to meet increasing costs. This is obviously
unwelcome at a community level, given cost of living hikes and the pressure that Councillors have endured has forced some to step down in recent years.”
Mayors Firman and Fitzpatrick affirmed that the CMA Board will continue to advocate and lobby for CMA Members to receive what they consider a fair share.
