The Fiscal Star report into local government financial sustainability is the second to be released by Review Today. Last year’s survey created controversy among local councils, with the Local Government Association of NSW (LGA) objecting to the disclosure of individual council results.
In November, NSW LGA president, Cr Genia McCaffery told Government News: “The problem that local government has with Fiscal Star is that is its being promoted by a group of consultants who are touting for business with local government."
This year, however, Cr McCaffery agreed with the major findings of the report.
Cr McCaffery told Government News: “I am less critical of the report this time because there was a lot more consultation with councils.
“The broad thrust of the report is refecting what we generally know. It is saying that rate pegging and cost shifting means councils do not have the financial resources to maintain a level of service and infrastructure that our communities need.”
The 2007 survey was also criticised for only taking into account deficit, debt and infrastructure backlog, ignoring other financial factors. Review Today chairman, Professor Percy Allan, defended the 2008 survey.
“This year it does take into account other financial factors,” Professor Allan said.
Cr McCaffery said regional coastal urban councils were not to blame for their high unsustainable rating.
“It is not the fault of council or poor financial management. They are dealing with massively increased populations and their rates are constrained by rate pegging,” she said.
“They should be getting significant support from the state and federal government.”
According to the LGA, the time has come to put an end to rate pegging.
“Councils should be able to negotiate with their community. It is ridiculous for the state government to be dictating rates,” Cr McCaffery said.
“Rates should not be set from Macquarie Street, they should be set at each local community.
“State and federal government have been starving local government for years and it has got to stop. If councils cannot supply decent standards of infrastructure there will be a backlash, not just at a local level, but at the next level of government”
When asked whether the Fiscal Star report would prompt state government into action, Cr McCaffery said “you can only hope.”
According to Professor Allan, councils should not hold their breath.
“It would also be foolhardy for councils to ignore the Fiscal Star sustainability ratings in the hope that the Commonwealth and State will eventually come to their rescue.”
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