Bankrupt Councils !

New South Wales has 152 local councils and the ratio of residents to councillor ranges from less than 150 to 20,000 and cumulatively they employ a work force of about 45,000.  Unfortunately, two thirds of them have an annual deficit of over $ 400,00 and are ranked as "unsustainable ".   Each year this situation deteriorates.

The state government is on the horns of a dilemma.    Before the last election it promised there would be no forced council amalgamations and yet if this situation is allowed to continue unabated there is a real prospect of council bankruptcies.  Premier Mike Baird is offering the carrot in place of the stick and promising a ten million dollar grant to councils that willingly amalgamate with a neighbour to achieve economies of scale and bring costs under control. This largess will come from the electricity sell off.

Seventy years ago a city like Wollongong had over a dozen local councils - and now it has just one.   In those early days the purpose of councils was limited to providing somewhere for a rubbish tip, paying for "night soil "collection and looking after the local streets.  Over the years new services fell on council shoulders - from providing libraries to provision and maintenance of parks and sporting facilities - to maintaining a health care regime and even child care facilities.   Both the Federal and state governments added to council responsibilities - without adding to the council money pot !

The fatal blow came when council rates were limited  to increases below the rate of inflation each year to help maintain a reasonable cost of living.   Council finances fell further behind and most now have a works backlog that they can never hope to eliminate.  Their only source of income comes from property rates, and they are controlled and at the whim of the state Treasurer.

Here in Wollongong there is pressure for an amalgamation with our twin city of Shellharbour.  There is a degree of logic in that suggestion, but it is bitterly opposed by the majority of residents in both areas - mainly on the grounds of loss of local control.  Proponents cite a saving by eliminating the duplication of services, but that will impose a loss of jobs, with the usual finger pointing to determine which area will suffer the loss.   We already share much heavy equipment and it could probably achieve even more savings if both council works programmes were folded into a common entity while still leaving each council administration intact.

In the end, the sticking point is rate revenue.   By government edict, pensioners get a big cut on their council rates and neither state or Federal land pays into the rate pool - and all churches are exempt. The money available to councils for services come exclusively from  home owners and this level is dictated by the higher levels of government.  If rates are allowed to rise to a sustainable level, they will certainly impose financial pain - and earn retribution at the ballot box.

Pity the council that has huge suburbs rich in welfare housing.  Other levels of government collect the rent but do not pay council rates, and yet the council is required to provide exactly the level of municipal services as apply to rateable households.    The rich churches escape the rates net - and is there any real reason why a state or Federal property should be rates free ?

Amalgamations are certainly part of the answer, but it's time that local government went back into the melting pot and the entire cost structure got a new examination.   The rate collection net needs to widen and realism applied to paying for council services.   Unfortunately, those escaping the need to pay council rates are unlikely to see it that way !