General News

1 April, 2024

Rural councils to help in addressing cost shifting

Gilgandra Shire Council has been asked to aid Local Government NSW (LGNSW) in addressing cost shifting onto the region.

By Nicholas Croker, Cadet Journalist

Rural councils to help in addressing cost shifting - feature photo

Gilgandra Shire Council has been called upon by Local Government NSW (LGNSW) to collaborate in addressing the issue of cost shifting onto the region, following an investigation into the financial sustainability of regional NSW councils. Cost shifting occurs when state and federal governments transfer responsibilities for infrastructure, services, and regulatory functions to local councils without providing adequate funding.

According to Cr Darriea Turley AM, President of LGNSW, reports indicate that the rise in cost shifting has been exacerbated by various policies of the NSW Government. In the 2021/2022 financial year alone, cost shifting amounted to $1.36 billion of unfunded costs passed onto councils and communities statewide, equating to an average additional cost of $460.67 for every ratepayer.

This situation has led to a reduction in services, infrastructure maintenance, and investment, thereby limiting opportunities for residents and businesses. Rural and regional councils, in particular, face significant financial sustainability barriers due to their limited ability to generate revenue compared to city councils.

Analysis of financial data from 87 member councils of the Country Mayor Association of NSW (CMA) revealed that operating costs are much higher per capita for smaller councils, with up to 80 percent of their revenue reliant on grants from state and federal governments.

However, grant income is unreliable and subject to variability, with project funding susceptible to cost escalations at short notice. In response, LGNSW and CMA are urging rural councils to advocate for change to address these challenges.

Cr Turley emphasizes the importance of highlighting and resolving the longstanding impacts of cost shifting on financial sustainability, especially as the NSW Government's 2024 review of the financial model for local government approaches. This review presents an opportunity to address these issues and ensure a fair and sustainable financial framework for councils across the state.


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