The Western Sydney Regional Organisation of Councils (WSROC), says news that the NSW Government will establish an independent review of the financial arrangements for local government is long overdue.
NSW Local Government Minister, Ron Hoenig, this week announced that the Government will commission an independent investigation into the current financial model for councils.
Minister Hoenig said the Government was in the process of developing the appropriate terms of reference for such a review.
“For some years, we have been urging both state and federal governments to work with councils to devise funding solutions that enable councils to become more sustainable in the long term,” said WSROC President, Councillor Barry Calvert.
“The extraordinary complexity of the existing financial model — and the arbitrary constraints on how local government can fund services and infrastructure delivery — hinder councils from meeting community expectations, especially in rapidly growing regions such as Greater Western Sydney.
“The costs of delivering basic essential services far exceed the capacity of the current funding mechanisms — an ad hoc mixture of rates, grants, and developer contributions.
“While WSROC welcomes Minister Hoenig’s announcement of an independent investigation of council funding, we are urging a review of both federal and state financial relations affecting local government.
“We want to see recommendations that outline how all three levels of government can work together to build a stronger economy, and ultimately, deliver better value for taxpayers and ratepayers.”
President Calvert said particular focus should be given to investigating options for a fairer, more efficient, and more reliable system of Commonwealth and NSW Government funding for local government.
“Minister Hoenig should ask why so many councils have little choice but to seek substantial increases to rates income, and should also review the current special variation guidelines, criteria and process,” he said.
“Recent IPART and Productivity Commission reviews into local government funding arrangements, including a Review of Domestic Waste Management Charges, have taken a piece-meal approach to local government funding, and this limited scope fails to capture either ‘whole of business impacts’ or ‘whole of sector’ outcomes.
“Councils are being used to collect revenue for the State Government coffers and then criticised for levying reasonable fees for services.
“If the NSW Government adequately supported councils by returning more of the $800 million it raises through the Waste Levy every year, maybe councils would be better able to provide the essential services and infrastructure our communities expect.
“Perhaps, too, if councils could determine what they should spend their developer contributions on, they may have more freedom to deliver what communities need.
“The challenge for the independent investigation should be to identify options and ways to improve the system and at the same time promote a stable and reliable revenue base to fund essential services and infrastructure into the future,” said President Calvert.
“At the moment, focusing on councils alone will not cut it.”
