Regional councils hit by funding freeze

Federal Assistance Grants are traditionally indexed to rise in line with inflation and population growth, but the federal budget proposes to cut the annual increases for three years, delivering a 10 per cent reduction in overall funding.

President of Local Government NSW Keith Rhoades said “the shortfall for NSW councils in 2014-15 will be $29.9 million, $62.2m in 2015-16, $95.8m in 2016-17 and $99.8m in 2017-18.”

It remains to be seen what, if any, solutions to the funding shortfall will be brought by the NSW government in its budget on July 17.

Mr Rhoades said the funding freeze will bite hardest in the bush.

Rural and regional councils are more dependent on the assistance grants than their metropolitan counterparts, due to their small rate bases and extensive road networks, he said.

Metropolitan councils can access alternate revenue streams, such as parking payments.

“The federal grants are like oxygen, councils need them to survive,” Mr Rhoades said, “Without (the funding), we won’t be able to keep up with the schedule of works,”

Central Darling Shire Council has been placed in administration by the State government, due to the parlous state of its finances.

“They are not the only rural and regional council getting down to the borderline of financial viability,” he said.

Councils maintain much of the infrastructure that drives local productivity, such as maintaining 90pc of the State’s roads.

However, a NSW government report last year revealed the pressure they are under.

A quarter of local councils are in a “weak” or “very weak” financial position and the State’s backlog of infrastructure stands at a whopping $7.2 billion, the report said.

Local government minister, Paul Toole, would not reveal what the budget holds for council funding.

But he indicated another round of belt tightening could be in store.

“There is no pot of gold to solve the financial problems facing many councils,” he said.

“To ensure communities have the very best front-line services in the future, councils will need to make some tough decisions.”

Country Mayors Association NSW chairman Rod Kendall said council rates may need to rise.

“Consideration should be given by State government to put some relief on rate pegging in view of this decision,” he said.

He was quick to add regional councils would be loathe to do so, in light of the pressure this would put on ratepayers.

Mr Rhoades and Mr Kendall both said reforms would be needed to redistribute the remaining funding from the Federal Assistance Grants to rural and regional councils.