Moira Shire Council chief executive Matthew Morgan says cost shifting is “death by a thousand cuts”.
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In 2023/24, Federation ratepayers each had about $570 eaten up by costs imposed on councils by the NSW and Federal governments.
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In Moira and Indigo Shires in Victoria, it’s much the same picture as cost shifting impacts councils’ ability to fund services.
The costs are overwhelmingly from state governments and councils are saying “Enough!”.
Federation mayor Cheryl Cook said it was time to end cost shifting once and for all “so that we can invest our community’s money back into the services they need, expect and most importantly deserve”.
Cost shifting occurs when state and federal governments force councils to assume responsibility for infrastructure, services and regulatory functions without providing sufficient supporting funding.
In the 2023-24 financial year, NSW councils were estimated to absorb $1.5 billion in costs due to the practice.
In Victoria, Moira Shire chief executive, Matt Morgan said the biggest challenge was the freezing of indexation on government grants, particularly the Federal Assistance Grants, which were set at one per cent of Federal tax income.
Without indexation since 2014, that amount is now half of one per cent.
“What that means for us in real dollars terms … if it was increased back, that would equate to another $14 million for Moira Shire each year,” Mr Morgan said.
“Where government departments start to shrink their service delivery, covert cost shifting means local government picks up the tab or deals with the consequences of that service being used.
“The result is death by a thousand cuts.”
Mr Morgan said he didn’t believe the practice was orchestrated, but a case of each department looking at ways to minimise costs.
“Councils deal with different departments; each department is trying to cut back, and no-one is talking to the other, so they don’t understand the global impact on communities,” he said.
“Take the shift in responsibility for waste disposal in state parks; to plug the gap is costing Moira Shire $200,000 every year.”
Councils are also being forced to exempt profit-driven, state-owned corporations and other organisations from paying rates, even though they use and benefit from local government services and infrastructure.
That burden is shifted to ratepayers.
Federation mayor, Cheryl Cook says the practice of cost shifting is fundamentally unfair and it is time to end it.
Cr Cook said it was “fundamentally unfair” that ratepayers were being forced to subsidise State Government services they didn't design and weren’t funded to deliver.
“$570 isn’t just a number; it's a direct impact on our ability to deliver for our community,” she said.
Since 2016, councils have been subject to rate capping, which limits increases in total rate revenue.
Councils that determine they need a higher rate increase can apply for a special rate variation (SRV), as in the case of Federation Council, which recently had an SRV approved.
In Indigo Shire, chief executive Trevor Ierino said local councils were given no opportunity to provide input into the soon to be introduced Bill to amend the Planning and Environment Act 1987.
Mr Ierino said the changes were significant and would directly affect how council’s manage development and planning in their communities.
The Bill is expected to be introduced by the end of October.
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