Image: Ken Teegardin
When 22 councils in New South Wales applied have their rates increased, they probably didn’t expect that it would become part of the controversial amalgamation debate.
That’s just what has happened following a release of special rate variation decisions from the Independent Pricing and Regulatory Tribunal’s (IPART), which has allowed a rate increase for 21 out of 22 applying councils.
This means that most approvals will lead to increases in average rates of less than $1.50 per week in 2015-16, and if implemented in full, 10 of the applications approved would lead to average increases in residential rates of less than $1 a week in 2015-16 including the 2.4 per cent rate peg.
The largest rate hike will be in Grydir at $3.33 a week.
But when the Office of Local Government commented on the rate variation decisions, Minister for Local Government Paul Toole linked the matter to the state’s Fit for the Future program in order to solve councils’ financial sustainability problems.
Mr Toole said it was concerning that so many councils in both Sydney and regional NSW were struggling financially.
“Councils have told IPART that without significant rate increases they would not be able to provide essential services and reduce their infrastructure backlogs,” Mr Toole said.
According to Mr Toole, in the last two years alone, one third of NSW councils have asked ratepayers to pay more.
“Councils are advising IPART these rate rises are to repair infrastructure and that they would be financially unsustainable without them,” Mr Toole said.
He said this is not viable in the long-term.
Although Mr Toole only mentioned the state’s Fit for the Future program as a way to strengthen the local government section to create a better system, NSW councils have looked at his comments very differently.
Council peak body Local Government NSW (LGNSW) accused Mr Toole of being “disingenuous” over rate rises for linking IPART’s rate variation decisions to the state government’s “push for council amalgamations”.
While there has been much tension over the issue of forced mergers by the O’Farrell and Baird governments since the election of the Coalition in 2011, the war of words over forced mergers came to a head in May 2015 when MP Alex Greenwich proposed legislation that would protect councils from amalgamations.
But Mr Toole stood firmly against any such legislation, which has strengthened the resolve of LGNSW President Keith Rhoades, who has passionately campaigned against any government policy that would create a set of “mega councils” in the Sydney metropolitan area.
Mr Rhoades said the government was using a problem created by itself and its predecessors to “justify the ideologically-driven agenda of forced council amalgamations”.
He argued that the problems created by the state government such as rate pegging and cost shifting have created the current circumstances that have led councils to apply to IPART for allowances in raising their rates to pay for essential services.
Mr Rhoades said it was “particularly interesting” for Mr Toole to express alarm about rates now, at the very time the Baird government was moving to force council amalgamations.
“The Baird/Toole Fit for the Future package actually offers council an easier process to increase rates as an incentive to amalgamate,” he said.
“It’s disingenuous, and it’s duplicitous, and it shows a real contempt for the wishes of local communities,” Mr Rhoades said.
He said state government created this problem, and now it’s using it as cover for its hidden agenda.
Although the state government is providing incentives to councils willing to amalgamate into “mega councils” through better access to loans, Mr Rhoades said there is no benefit to ratepayers because loans will still have to be paid back and rates will still have to rise to service those loans.
Councils aren’t under the belief that forced amalgamations would solve their financial woes, due to the estimate that it would cost rate payers an additional $445 millio.
Also a number of councils have told LGNSW that they believe amalgamation will lead to more rate rises because rates will have to cover any infrastructure backlogs in neighbouring councils with which they may be forced to merge.
Mr Rhoades accused Mr Toole of being incredibly duplicitous by using a longstanding funding problem as cover for an ideologically-driven move to increase control over local communities and neighbourhoods.
The City of Sydney has also commented on the matter, with Lord Mayor Clover Moore giving a reminder that her current council was created through a forced amalgamation in 2004.
“Our experience confirms that amalgamations are highly disruptive,” Ms Moore said.
She said any forced amalgamation presents a serious risk to Sydney’s capacity to deliver major projects and development currently in the pipeline.
