New England mayors explain rates squeeze, welcome funding review

It's a question pondered by ratepayers across the Northern Tablelands.

Armidale ratepayers face a 58.8 per cent rise over three years, Walcha was given the green light to raise rates by 57.7 per cent over the same period and Tenterfield Council was granted a rise of 43 per cent.

Households are being stretched and councils are bearing the brunt of complaints over a perceived lack of value.

But mayors across the region feel -- and share -- your pain. They are juggling cost shifting from state and federal governments, with limited means of raising revenue to pay for more services under forced amalgamations.

Now the NSW Government has commissioned an independent review of the local government financial model.

Under its terms of reference the Independent Pricing and Regulatory Tribunal will be looking at whether councils deliver value for money for ratepayers, if the current funding model is sustainable and whether councils have the financial capacity, let alone capability, to meet the needs of their communities.

Of those contacted, all mayors in the Northern Tablelands will be making submissions to the review.

The combined message is, "Bring it on".

"Regional councils are currently structurally set up to fail under the rate peg methodology," Armidale Regional Council Mayor Sam Coupland said.

"Many people think if your population is growing, then your rates base will increase and you will yield more income," he said.

"But under the current model, that's not the case. We [Armidale Regional Council] went for a 58.8 per cent rates rise, but all that means is we can only grow our total rate revenue by that.

"The rate peg was 0.7 per cent the year before, when inflation was running at about 7 per cent. It's just not viable."

So why must councils raise rates so steeply?

Part of the blame must be borne by federal and state governments that have cost shifted responsibilities, including for roads and the emergency services levy.

Tenterfield Mayor Bronwyn Petrie and Inverell Mayor Paul Harmon give the former Bruxner Highway as an example.

Once the responsibility of the state government, sections of the road were downgraded and became the onus of Inverell and Tenterfield ratepayers.

"The state government gave us a bit more funding, however, it's never enough to cover the cost of maintaining the roads and also depreciation costs," Mayor Petrie said.

Between the Bruxner Way and Mount Lindesay Road, Tenterfield ratepayers are faced with $900,000 in depreciation costs each year alone, "and that comes into our balance sheet", Mayor Petrie said.

Moree Mayor Mark Johnson said his council was tasked with maintaining more than 3000 kilometres of roads, two thirds of which remain unsealed.

"Even the slightest shower can do significant damage to an unsealed road and the repair is Council's responsibility," Mayor Johnson said.

"Keeping the roads is really beyond our finances, we spend tens of millions of dollars each year in maintaining our network alone.

"It's always been an issue for this shire, which is agriculture backed. If we have farmers who cant get their crops transported, then that costs the community."

All mayors complained about the state emergency services levy, which contributes to funding fire and emergency services.

The levy was dumped on councils last year without warning.

Mayor Petrie said, "We lose about 12 per cent of our rates just paying the levy."

Mayor Harmon said another classic cost shifter was pensioner rebates on rates; once the sole responsibility of the state government, much of that was now borne by councils, he said.

"Council costs are rising above what the rate pegging is," Mayor Harmon said.

"Last year the rate peg was 3.25 per cent and then you have wage and continuing costs running at 5 per cent plus.

"We only have a certain amount of income and as costs increase, our ability to deliver extra services is greatly reduced."

Another bugbear for Northern Tablelands mayors is the responsibility of the depreciation of the cars, trucks and mobile equipment for the Rural Fire Service, or red fleet.

"But we have no control of purchase, sale and location of those vehicles," Mayor Petrie said.

A main problem for local councils such as those in the Northern Tablelands is a limited capacity to raise funds.

Rates and grants are the main sources of revenue, whereas metropolitan councils can rake in large amounts of revenue from parking meters, for example, under the "own source revenue".

All mayors will lobby for different rules for regional and metropolitan councils, as rural councils face vastly different issues than their city counterparts.

There are fewer ratepayers, a lack of essential services such health facilities and greater tracts of land to maintain.

For Tenterfield a big problem with its open land is weed management, for Armidale, maintaining the parks and reserves which gives the city its beauty.

Mayor Coupland said Armidale, after its steep rates rises, now had "its house in order".

He also cited the creation of a Future Fund, with revenue coming from renewable energy providers, to provide a source of revenue that will invest in future generations.

As part of the review, IPART will look at the $1 billion it costs councils annually to fulfil extra responsibilities taken on in recent years, including childcare, aged care, transportation services to the elderly, underwriting air transport services and primary health services.

Mayors will argue for better and more consistent funding of their councils, particularly in relation to roads, critical to financial sustainability.

Mayor Petrie said mayors were also pushing for the return of the federal Financial Assistance grants to 1 per cent of total taxation revenue, rather than the 0.5 per cent it currently sits at.

"That would make a difference of $5 million a year to us, which was why we were pushing to raise the rates in the first place," Mayor Petrie said.

Ratepayers have also been urged to make a submission to the inquiry, with responses closing on March 15.