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Local government funding: just another costly ‘entitlement’?

by Maria Taylor

Local governments, including Palerang and Queanbeyan, have been stung by the budget news that, along with pensions and health services, future federal funding for essential local government responsibilities will be trimmed.

Additionally a regime of competition for funding is proposed in line with the federal government’s ideology that even government services should be competitive and/or handed over to the private sector.

Local governments are responsible for all infrastructure maintenance or extension (e.g. roads, bridges, parks, public buildings etc) in their jurisdictions, as well as waste management and environmental management. They are reliant on federal and state ‘grants’ to do their work otherwise it would totally be on the local ratepayers.

Queanbeyan Mayor Tim Overall said that while there would be an increase in Roads to Recovery funding, the federal government proposed not to increase Financial Assistance Grants along with cost of living and population growth (indexation), as currently is the case.

“As a result councils in NSW, if no changes are made to the calculations, will experience a four-year shortfall of $288 million. The president of Local Government NSW, Keith Rhoades, has called the freeze an alarming decision and says it in effect cancels out the welcome Roads to Recovery news.”

Palerang Mayor Pete Harrison said while proposed road funding might double, all other infrastructure funding would be on a competitive grant basis

between local councils and even then it would need to be matched 50-50 with local money. He agreed that councils stand to lose more than they are gaining with road grants.

Palerang has estimated that the decision to freeze indexation of Commonwealth grants means it will lose $1.2 million in revenue over the next four years. “This will directly impact Palerang’s ability to provide essential services and maintain and build infrastructure,” says a council report.

In Queanbeyan the preliminary assessment of the shortfall in the four year budget set up by council to 2017 is almost $753,000.

The two mayors along with others from the South East Regional Organisation of Councils (SEROC) and ACT chief minister Katy Gallagher have met with their federal representatives – for Eden Monaro (Peter Hendy, Liberal), Hume (Angus Taylor, Liberal) and Canberra (Zed Seselja, Liberal) to lobby for a reversal of this policy.

SEROC comprises the ACT Government and the NSW Local Governments of Bombala, Boorowa, Cooma-Monaro, Eurobodalla, Goulburn-Mulwaree, Harden, Palerang, Queanbeyan, Snowy River, Upper Lachlan, Yass Valley and Young.

They presented a list of issues emerging from the budget including:

public service job cuts in the ACT with a significant proportion of employment in the surrounding region to be impacted

    freezing of the indexation of Financial Assistance Grants bearing in mind these grants represent up to 50% of council capital expenditure; and

    the reintroduction of fuel excise which is major imposition on rural councils.

“Our economy doesn’t stop at the border”, noted Gallagher. SEROC is banding together for economic development and also for discussions about funding reform with federal and state governments.

To date, Hendy and Taylor on other issues affecting local development or employment, such as rural wind or solar farms, have toed quite an ideological line set by the Abbott Hockey government when talking to the communities that elected them. The jury remains out on whether they more independently represent local interests on this one.

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