From the Newsroom

Ratepayers to bear financial burden

Geoff Helisma

Clarence Valley Council (CVC) was unanimous when it came to supporting Local Government NSW’s (LGNSW) submission to Parliamentary Inquiry into Infrastructure Contributions Bill, July 2021.

The submission, on one hand, points out that its objective is to prevent “a cost shift from developers onto ratepayers and councils”, however, on the other hand, it states that the NSW Productivity Commission’s findings in relation to the rate-pegging system “confirm the long-held views of local government … that the current rate peg process is undermining the financial sustainability of councils and diminishing their capacity to deliver infrastructure and services”.

“Over 40 years of rate pegging in NSW has resulted in the under-provision of community infrastructure and services and the deferral of infrastructure maintenance and renewal expenditure resulting in infrastructure backlogs,” the submission states.

“The backlog was estimated to be $38 billion in 2018-19.

“The NSW Productivity Commission also confirmed that NSW has the lowest per capita rates, as the result of rate pegging, and estimated that NSW rates are around 30 per cent below the national average, with NSW councils having foregone $15 billion over the past 20 years when compared to Victorian councils.

“This has inarguably had a negative impact on the provision of local infrastructure and services and local job creation in NSW and continues to undermine the financial sustainability of NSW councils.

“LGNSW advocates the removal of rate pegging as a key measure in strengthening the financial sustainability of local government and reducing the infrastructure backlog.”

One way or the other, if the changes proposed in the Infrastructure Contributions Bill are adopted, or LGNSW’s lobbying to have rate-pegging abolished is successful, ratepayers are likely to be asked to foot the bill.