Friday, 09 February 2024 08:04

Western Sydney councils welcome IPART inquiry – and call for more rational funding model Featured

WSROC supports a rigorous review into the financial resilience of Councils WSROC supports a rigorous review into the financial resilience of Councils WSROC

The peak body representing councils in Greater Western Sydney, the Western Sydney Regional Organisation of Councils (WSROC), has welcomed the latest Independent Pricing and Regulatory Tribunal (IPART) investigation into NSW local council finances — but is urging IPART to undertake a rigorous review of how Federal and State level policy impacts the financial sustainability of Councils.

On 30 January, the NSW Minister for Local Government Ron Hoenig announced the government had asked IPART to examine the financial model for councils and key factors impacting councils’ financial sustainability.

“Our concern is the government’s draft terms of reference for the investigation omit critical external factors such as Federal and State Government policies that impact the financial model underpinning local government funding,” said WSROC President, Councillor Barry Calvert.

“WSROC supports the NSW Government undertaking a rigorous review into the financial resilience of Councils but urges it to focus not just on what can be done better by councils but also on how Federal and State level policy impacts the financial resilience and sustainability of Councils.rapidly growing population

“This is especially important at a time when local councils are under pressure from government to provide more housing, infrastructure and services for rapidly growing populations.

“For example, ‘cost shifting’ by the NSW Government and the Australian Government onto local councils in NSW in the financial year 2015/16 was estimated to have been $820 million — up from an estimated $380 million in 2005/06.

“The NSW Government is responsible for most of the cost shifting, however, with just two per cent attributed to the Australian Government.

“The increase is mainly driven by the NSW Government’s $800 million annual waste levy. 

“So, while the NSW Government shifts responsibility to local government for funding vital services and functions, it ensures the means to funding those services lie with itself.

“We are seeing growing community expectations regarding services and infrastructure delivery, and in a growing region such as Western Sydney, expectations far exceed what current funding mechanisms – in the form of rates, grants and developer contributions – can provide.

“Greater Western Sydney’s population is growing at such a rate that we will need to house more than one million additional people by 2036.

“To address long-term financial pressures and to deliver on community priorities, we especially need the Government to closely examine how Councils can achieve financial sustainability where community expectations are rising and the cost of providing services is increasing at a greater rate than revenue.

“Councils are especially sensitive to a growing liability for unfunded infrastructure - particularly in growth areas such as Western Sydney which is being impacted by growing costs as the climate changes, populations age, technology advances and work patterns change.

“The demand for ever more housing also compounds other significant challenges Western Sydney councils are dealing with, including finding ways to ensure our communities have access to reliable, and affordable energy and rebuilding local infrastructure after recent disasters such as floods and bushfires.

“In October 2019, the NSW Government’s independent, expert panel released a discussion paper, NSW Review of Federal Financial Relations, examining how the NSW and Commonwealth Governments can work to build a stronger economy, encourage state-led reform, and ultimately, deliver better value for taxpayers.

“WSROC is urging the NSW Government to examine how all three levels of government can work together to build a stronger economy and, ultimately, deliver reform that offers better value for taxpayers and ratepayers.

“Particular focus should be given to finding a fairer, more efficient, and more reliable system of Commonwealth and State funding for local government,” said Councillor Calvert.

“A critical shortcoming of the current approach is the lack of focus on how councils’ financial relations with the state and federal governments impact the delivery of both infrastructure and services.

“Ad hoc grants programs must be replaced by longer-term funding streams that are fair and equitable. This will ultimately deliver better community outcomes because councils can plan better.

“As councils in Greater Western Sydney look to the future, the demands of population growth and other internal and external factors are putting ever greater financial pressure on them. Not the least of which is the constant cost-shifting from state to local government,” said Councillor Calvert.

Last modified on Friday, 09 February 2024 09:17

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