Temora Mayor Rick Firman and Leeton Mayor George Weston have spoken out against ‘cost shifting’. Photo: Leeton Shire Council.
Leeton Mayor George Weston has become the latest voice to criticise so-called “cost shifting” from higher tiers of government onto local councils.
Because they have a higher revenue base, state and federal governments have traditionally subsidised the cost of running council assets and services, such as parks, libraries, galleries, community events and rubbish collection.
But a report commissioned by the representative body Local Government NSW (LGNSW), released last month, argues these governments have gradually reduced their financial support for councils while also imposing higher levies on local government to pay for things such as emergency services and waste removal.
“On average, this now represents an inflated cost of $497.40 for each NSW ratepayer (up from $460.67 in 2021/22),” Mayor Weston said.
“It is unfair to our communities that such a large portion of their rates is being diverted away from local priorities, such as those earmarked in the 2025-2029 Delivery Program.
“Our communities deserve better. The decades-long practice of cost shifting is continuing to undermine the financial sustainability of the local government sector. This must stop.”
The cost shifting report, produced by independent consultants Morrison Low, claims that $1.5 billion of expense has been imposed on NSW councils in the 2023/24 financial year. This is an increase of about $140 million (10 per cent) since the last report for the 2021/22 financial year, when the total cost shift was estimated at $1.36 billion.
The report argues that councils are left with the choice of either continuing the service and taking on the burden of the cost or ceasing the service entirely.
Free town libraries are a popular longstanding facility that may be under threat.
“The original commitment from state government was to fund up to 50 per cent of libraries’ cost for many councils,” the report states.
“It now covers approximately 6 per cent of the total costs, leaving councils to fund an additional $181.8 million to make up the difference.”
A parliamentary inquiry in November 2024 into the ability of councils to fund infrastructure and services also called for the NSW Government to identify opportunities to reduce cost shifting in local government.
At its latest council meeting, Leeton Council resolved to write to the Premier, the NSW Treasurer and the NSW Minister for Local Government seeking to urgently address cost shifting through a combination of regulatory reform and appropriate funding.
Over the past two years, Leeton, Griffith and Narrandera councils have sought to apply to the state regulator to allow them to substantially increase rates – identifying ‘cost shifting’ as a key reason for the need to do so. The rate hikes were approved in Griffith and Narrandera but voted down in Leeton.
Bega Council also implemented a rate hike of 24 per cent in 2023/24 and 19.6 per cent in 2024/25 and recently proposed yet another increase.
“Councils are at breaking point. The combination of relentless cost shifting, rate capping and inadequate state and federal funding is eroding the sector’s financial sustainability,” Forbes Mayor and LGNSW president Phyllis Miller said.
