After speaking up continuously about inequity between city and country, the Country Mayor’s Association has welcomed a review into the financial stability of Local Governments.

Summing up the situation, CMA Chair and Gunnedah Mayor Jamie Chaffey said, “Rural and regional Councils face greater financial sustainability barriers, with a reduced ability to generate their own source revenue than city councils.”

Mr Chaffey announced that draft Terms of Reference from the NSW Government to the Independent Pricing and Regulatory Tribunal (IPART) for a review of the local government financial model are now on the tribunal’s website.

Data analysis of 87 CMA member councils’ financials shoes that operating expenses are far higher per capita, yet low-rate bases mean smaller councils rely on up to 80 percent of their revenue coming from grants. Of course, grant income is often variable and project funding is subject to cost escalations at little to no notice.

Narromine Shire Council Mayor, Craig Davies said the situation for small councils is dire.

“It's only getting worse, Mr Davies said. “It basically gets worse every year – as a council, we've got more roles to undertake and less money to do it.”

“We really need to get the funding we need to undertake the extra burden that is placed upon councils. Current Federal Assistance Grants are so weighted towards the heavily populated city shires and what we get the bush is a pittance.”

Commonwealth-legislated annual Financial Assistance Grants were first established in 1974 and were originally set at one percent of Commonwealth revenue. They have been decreasing in value since the freeze in indexation in the 2014/15 budget and are now estimated to be just .55% of Commonwealth revenue.

Mr Davies said he hoped the proposed review would help shed light on ways to maintain the sustainability of regional councils because it is just getting harder.

“Our ability to provide services to communities is diminishing each year, due to the fact that we just simply don't have the funds,” he said.” We are very beholden to both levels of government. Last year we had 7.3 per cent inflation, and yet Narromine had a rate cap of 3.5 per cent. So immediately, we are 3.8 per cent behind in terms of our financial sustainability.”

Deputy Chair of the CMA and Mayor of Temora Shire Rick Firman said any investigation and report on the financial model for councils in NSW needed to be open-minded and deliver constructive recommendations.

 “It must also recognise the extra responsibilities on rural and regional Councils,” Mr Firman said. “Many of our members fill the gap by providing services where State and Commonwealth governments are absent, such as:

• Operation aged care facilities
• Childcare facilities
• Transportation services to the vulnerable
• Subsidised housing to doctors and other key workers
• Underwriting air transport services
• Underwriting provision of primary health services.

“And the list goes on – all with a low ratepayer base and limited ability to generate own source revenue without impacting commercial small businesses within their council area,” he said.

Mr Davies said council funding is based on a number of factors but in the end, most regional councils are at a disadvantage.

“Clearly population is one of the reasons for funding amount and that’s why city councils do so well out of it,” he said.