Gunnedah Shire Council planned to call on the NSW Premier, Treasurer and the NSW Minister for Local Government after concerns were raised about a significant jump in cost shifting during a Mayoral Minute at council’s February ordinary meeting.

Cost shifting occurs when responsibility or costs are moved from a higher government onto local governments without further or adequate funding other than general rates.

This could include infrastructure, service and regulatory functions.

Independent consultants Morrision Low on behalf of Local Government NSW found the cost shifting burden was valued at $1.36 billion per annum in the 2021/2022 financial year according to the Cost Shifting 2023: How State Costs Eat Council Rates Report Summary and Highlights.

It states this is up 78 per cent since the 2015/2016 financial year when the total cost shifting was estimated at $820 million per year.

This equates to $460.67 extra per ratepayer in NSW each year according to Local Government NSW.

Cr Jamie Chaffey said that because the Gunnedah shire is classified as a large rural council, it would likely equate to $490.

“Obviously, that is not sustainable for us in local government,” Cr Chaffey said at the meeting.

“We are seeing this not just in that financial year, it is something that has been getting worse in the time [of] my eighth year now as a mayor.

“I also sit on the board of Local Government NSW and [I am] unfortunate to be around those conversations with board members and it is even worse in metropolitan areas, the way that they actually feel this burden of the cost shift.

“It is not acceptable and I think, I am very proud as a board member of Local Government NSW that we are standing up to the government and saying, both state and Commonwealth, ‘you can not keep doing this because we are the level of government that provides that face-to-face service and critical services like sewer, water, rubbish, parks and gardens, the things that make the community function. If you make us unviable, how are you going to handle that?’

“It is something that I think if not addressed by other tiers of government, there will be a point where everything will stop and let us hope they listen to us and they correct their ways before that actually happens.”

Cr Ann Luke commended the Country Mayors Association and Cr Chaffey for the work that had been done.

“It is something that I, as a councillor, will recognise through my work … that [the cost shifting] is a very erosive thing to do that is actually currently happening and we do have to put a stop to it,” she said.

Cr David Moses said that the cost shifting distribution was per person, not rate payer.

The officer’s recommendations included writing to the “Premier, the NSW Treasurer and the NSW Minister for Local Government seeking that they urgently seek to address these costs through a combination of regulatory reform, budgetary provision and appropriate funding.”

The draft letter found on the Gunnedah Shire Council website addresses Premier Chris Minns MP, NSW Treasurer Daniel Mookhey MLC, and NSW Minister for Local Government Ron Hoenig MP.

It states, “These hidden taxation arrangements harm communities and run counter to principles of transparency and good government.”

“For Gunnedah Shire Council this cost impost means that we are not able to continue to deliver existing service levels to our community without the consideration of increased rates and charges above the capping imposed by state government.

“Councils welcomed your pre-election acknowledgement that the decade-long practice of cost shifting had undermined the financial sustainability of the local government sector.

“To this end, recent reforms to the rate peg methodology by IPART are a step in the right direction. Also positive is your forthcoming review of the Emergency Services Levy, which must no longer be imposed on either councils or on insurance policies, in line with every other state in Australia. However, significant reforms remain required, and in November 2023 councils unanimously resolved at the LGNSW Annual Conference to call on the NSW government to take urgent action to address cost shifting onto local government.”

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