MAV projects council cost rises

Council costs will need to rise up to four per cent to deliver the same level of community services and infrastructure as last year, according to the Municipal Association of Victoria.

The forecast sees the rise at an estimated 3.9 per cent, with the Local Government Cost Index released each year as a CPI-equivalent (consumer price index) forecast of changes in Victorian council costs.

MAV President, Bill McArthur said the 3.9 per cent forecast rise in costs was a sector-wide average that would differ for individual councils.

This would depend on factors such as population growth, actions to reduce councils’ exposure to the carbon price, government funding received, and the impacts of other cost pressures, Mr McArthur said.

He said for councils to maintain $60 billion in community assets and provide more than 100 services requires both front-line workers and construction materials.

“These are the main cost drivers for local government,” Mr McArthur said.

Mr McArthur said local government does everything from child carers, engineers, road workers, nurses, planners, parks and gardens staff to life guards, school crossing supervisors, food safety inspectors and home care staff.

“These broad responsibilities make council expenses quite different to household costs,” Mr McArthur said.

According to Mr McArthur, government funding for joint community programs continues to be lower than actual council costs to deliver these services.

Other cost pressures will also affect council budgets for the coming year, he said.

“Many municipalities are struggling with growing waste management costs due to stricter state regulations for landfills, plus steep annual rises in state landfill levies.

“This year landfill levies that councils must collect and pass on to the Government will be in the order of $49 million or $20 per household,” Mr McArthur said.

He said councils also need to ensure community assets don’t decline faster than they can fun fund their infrastructure maintenance and renewal costs by “boosting” their capital spending.

“To help limit rate rises we’re also seeing councils introduce a range of cost saving measures such as energy efficiencies, joint purchasing and streamlined systems to make better use of current resources,” Mr McArthur said.

He said it’s a “two-way street” and councils are “acutely aware” of the need to keep rates affordable without compromising services provided to their communities.

“This is always a difficult balancing act,” he said.

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