Rural and regional councils face critical funding challenges, according to Warren Shire Council General Manager, Garry Woodman.

On behalf of council, Mr Woodman provided a comprehensive submission to the Inquiry into the Ability of Local Governments to Fund Infrastructure and Services by the Standing Committee on State Development. This submission, known as a Witness Presentation was detailed at the session in Dubbo last week.

"The pressure on Council to continue to provide services of appropriate standard to our community is now extraordinary," said Mr Woodman. "The recent downturn in grant income could severely impact our ongoing projects and the local contractors who depend on this funding."

Warren Shire covers an area of 10,860 kilometres and a population of around 3000 people. They operate with a $45 million budget which supports services including 691 km of sealed roads and 698 km of unsealed roads.

Two critical issues

In his submission, Mr Woodman noted factors that relate to most regional councils - rate pegging and cost shifting - two issues that are often in the news for the negative effect on LGA's.

Rate pegging is the maximum amount of money that a council can leverage via rate income each year. For most councils, general income consists entirely of rates income.

Mr Woodman highlighted the impact of this restriction, stating, "Since rate pegging in NSW commenced in approximately 1975, it has resulted in a significant funding gap of about 40 per cent compared to typical inflationary increases. This gap can impose significant challenges for the Council in funding infrastructure services."

Cost shifting occurs when state and federal governments force councils to assume responsibility for infrastructure, services and regulatory functions without providing sufficient supporting funding.

Local Government of NSW's latest cost shifting report was released in November 2023, highlighting a total cost shift to councils of $1.36 billion in 2021-22, which is the equivalent of more than $460 per ratepayer annually - a huge impost on small councils.

"Just for Warren Shire, the increased burden of cost shifting translates to at least $1.15million per annum, representing lost services, lost opportunity and lost amenity for all our residents and businesses. On average, it also represents an additional cost of $460.67 for every ratepayer across the state, escalating to $590.80 for ratepayers in rural councils such as Warren Shire Council,” Mr Woodman said. “With Council having to fund this ongoing subsidy each and every year, it means our community gets less or goes without, and effectively makes ratepayers pay hidden taxes.”

Call for change

Issues of sustainability were also laid bare at the Inquiry with Mr Woodman saying that Warren Shire has faced five flood disaster declarations over the last three years, leaving restoration bills of more than $15 million.

"The ongoing challenges of cost shifting and rate pegging make it difficult to provide the 'betterment' funds needed to build more resilient infrastructure," he said.

The Council's submission calls for flexible funding arrangements, reduced cost shifting and a re-evaluation of rate pegging to support the operational needs of local governments and ensure the delivery of essential services to the community.

For more information or to discuss the submission further, Mr Woodman can be contacted at Warren Shire Council on 6847 6600.