Plea to do better, council argues for fairer deal in submission to inquiry

The council made the comments in a submission to a state government inquiry on the ability of local governments to fund infrastructure and services.

In the submission, the council's Chief Financial Officer Rami Abu-Shaqra, said TRC is constantly reviewing its "efficiency and effectiveness" and "catering for what Council 'can do' in keeping with the overall aim of fiscal responsibility", but this is often not enough.

"The constraints on Council's ability to raise general fund income [rates] and limited recurrent government funding, combined with inflationary pressures on the costs of labour, plant and materials, are so significant that they are potentially leading to: a widening gap between the amount of funding needed and the amount of funding available for the maintenance and renewal of assets; and a lack of capacity to provide new facilities or increase current service levels without a consideration for offsets or funding options," the submission reads.

The rate peg is the maximum percentage by which a council is allowed to increase its income for the year. It is set by the Independent Pricing and Regulatory Tribunal. Councils can apply for an increase over and above that pegged limit.

TRC was recently approved for a 36.3 per cent rate rise over two years. The Council has indicated it intends to implement that increase, but the final decision will be made at the June 25 ordinary meeting, after a period of public consultation on the draft plans.

The submission to the inquiry notes that grants (both capital and operational) represent 40 - 45 per cent of the council's total revenue. But they are difficult to plan for and time consuming to apply for. "They are also not keeping pace with real inflation and growth," the submission says.

It also notes that developer contributions are heavily regulated and often restricted in their use.

"Often Council faces the inevitable of spending on infrastructure projects years after the collection of those funds when the cost originally estimated to complete the work is no longer valid and prices have moved up significantly; placing increasing pressure on council's other reserves to bridge the gap."

On rate pegging, the council's submission finds that during the decade up to 2020/21 the rate peg was aligned with inflation, but still did not allow council to build any sort of reserve, as the "rate peg was barely allowing us to recover the increases of cost of doing business."

"From that year onwards however, the financial gap between what we were able to raise and the rise of cost started to widen."

Cost shifting has been another issue for council, where there seems to be a trend where "cost shifting is getting worse".

"For example, for the Water Fund, the NSW Government introduced pensioner rebates and initially paid the full cost of the rebates. Whilst the NSW Government still requires Councils like us to pay pensioner rebates, the level of subsidy provided by the government has fallen significantly."

Council says its too early to determine if a change to the methodology used to calculate the rate peg "will mark the beginning of a 'fit for purpose' rate peg but for many councils, including ours, this will not fix past mismatches."

The submission says the process to apply for the special rate variation took its toll on councillors and council staff, plus there was extra cost involved in procuring the services of a specialised consultant to comply with IPART criteria.

"[This] could have been avoided if councils were allowed to increase rates in tandem with increases of cost of doing business and in yearly consultation with their communities."

Among the recommendations included in the council's submission, that the NSW Government provide to councils, particularly regional and rural ones, untied operational grants similar to the Federal Assistance Grant and that councils should be allowed to raise special levies for items that have community support.

Uralla Shire Council also made a submission to the inquiry.

In it, general manager Toni Averay says "since the introduction of rate pegging, the NSW Government has limited the ability of councils to collect property taxes and other related fees and charges".

"During this period, the State Government has also shifted costs from State to local government, increasing the burden on councils, while at the same time continually expressing concern and criticising councils for not being sustainable," the submission continues.

The council admits the "community would always like more work on the ground: more roads sealed, gravel roads graded more often, streets swept more often, better facilities in our parks and gardens, etc. However, the test is what is our community willing to pay to achieve these outcomes?"

The council says it is coping, "albeit with a tolerable reduction in service levels in some areas," especially over the last 12 years.

For example, roads are graded less frequently, and there is less time spent on maintaining parks and gardens and fewer 'outdoor' staff to do so.

On rate pegging the council says it has "resisted progressing an SRV," but eventually it will have no choice.

The council wants to get rid of the rate peg, a move it says "would even-out rate increases in line with inflation, CPI and council costs ... and support financial sustainability."

The inquiry has set three regional hearing dates on June 26, 27 and 28, with the details yet to be announced.