Growth impeded by revenue cuts
Growth in the Edward River region has again been impeded by the NSW Government’s apparent insistence on slashing local government revenue.
Edward River Council was yesterday advised that it can impose a two per cent overall increase on rates revenue in the 2022/2023 financial year.
While a vast improvement on the 0.7 per cent cap initially imposed by the Independent Pricing and Regulatory Tribunal, general manager Phil Stone said it does not go far enough.
Council requested an increase to 2.5 per cent (1.8 per cent over the imposed cap), and had prepared its draft budget and operation plan on the assumption it would be approved.
Even with a 2.5 per cent increase in overall rates revenue, council was anticipating a general fund deficit of $840,000.
Mr Stone said that deficit will now be closer to $900,000.
Talking to the Pastoral Times from the Local Government NSW conference in Canberra yesterday, Mr Stone could barely contain his frustration.
“This means we forego $40,000 in revenue, and we can therefore add $40,000 to the general fund deficit,” Mr Stone said.
“It may not seem like a lot of money in the long run, but it is not a material amount and the biggest issue is that it will now compound in future years.
“The 2.5 per cent we requested is still not the solution, but 0.7 per cent was an insult and the two per cent goes along the same lines.
“As GM I am trying, and the councillors have come out the blocks with a strong strategic direction for growth. But we can’t get the revenue we need for that growth.
“As a council our costs are going up, the expectation on council to do more is up and our income keeps being shaved down.
“The offer is based on last year’s long term financial plan figure, and as a council we are constantly impacted by these decision of the government and IPART.”
Mr Stone said he and Mayor Peta Betts would be writing to the local government minister and IPART expressing their disappointment in the determination and the process, and outlining the impacts on council moving forward.
While IPART said it would review the rate peg methodology to deal with volatility in economic conditions, and the timing of its decisions, Mr Stone said he would “wait until I see the details” before commenting on whether it will make any difference.
In the meantime, he said LGNSW is expected to move a motion this week demanding more funding from the NSW Government.
“Our president Linda Scott said (yesterday) that the percentage councils receive is less than four percent of the state’s total tax revenue,” Mr Stone said.
“There is strong advocacy here at the conference to get a further one percent increase.”
Council’s draft budget and operational plan, which is due to be adopted next Tuesday, will need to be revised to accommodate the lower than expected rate cap.
Mr Stone confirmed it should see a slight reduction on individual rate bills than what is predicted in the current documents.
Even if council had received its 2.5 per cent additional special rate variation, Mr Stone admitted there needed to be “prudent monitoring” of council’s finances to stem the compounding negative impact of the general fund deficit.
He said there are only four key ways to reduce the deficit, with council’s preference being efficiencies by improved automation or internal council processes.
Other ‘levers’ are increasing revenue (ie rates), reducing services or restructuring or selling off assets.