A Victorian Parliamentary inquiry has issued a report urging the State Government to address rates, grants and cost shifting issues which are putting strain on the state’s councils.
The Legislative Council Economy and Infrastructure Committee (LCEIC) has made 48 recommendations in its report on local government funding and services.
The Upper House inquiry concluded rising infrastructure and service delivery costs are outpacing growth in grant funding for the lowest tier of government.
As a result, some services are being reduced and others stopped altogether.
LCEIC Chair, Georgie Purcell, said that at the same time as meeting the needs of local communities, local government is extremely limited in its ability to raise revenue and thereby pay for the services it is expected to provide.
“This report has attempted to provide a balanced analysis of the issues faced and to provide some ways forward,” Ms Purcell said.
Reviews of the ratings system and rate cap formula are urged. The government is also being encouraged to streamline the process for councils applying for a higher rate cap to lessen the administrative burden.
Interface, peri-urban and regional councils would benefit from a proposal to create growth funds to support infrastructure delivery for different groups of councils experiencing rapid growth.
There’s a push to increase untied funding for councils to spend on key areas such as roads and for the state government to provide grant programs to support asset renewal and maintenance in local communities.
The report suggests the reintroduction of a decade-old Country Roads and Bridges Program, or similar, which is untied funding for local governments.
There are also recommendations to restore the 50:50 shared funding split between the state and local governments for public libraries and the School Crossing Supervisor program.
The Committee has called on the government to reverse the annual immunisation tax of $6,000 and the $2 fee per immunisation given, which are being charged to local governments.
Another proposal suggests the Council Planning Flying Squad be reinstated to provide short-term expertise and help in easing the backlog of planning requests for the state’s 48 regional and rural councils.
The Victorian Auditor-General could be tasked with investigating the financial impacts of cost shifting by the federal and state governments onto local councils.
Additionally, the government is being urged to work with the local government sector to establish a sustainability framework which sets different financial criteria for different council groups, and to ensure local governments are consulted when legislation which impacts them is being considered.
Throughout 2024 the Committee examined local government in Victoria, including rate capping, grants, cost shifting, core services and the financial sustainability of local councils.
This involved extensive research and consultation, which led to 114 public submissions.
“In the submissions received by the Committee and evidence given in public hearings, the concerns of both local government councils and ratepayers were canvassed widely,” Ms Purcell said.
Experts, government representatives and individuals expressed their views directly to Committee MPs during eight days of public hearings held in Melbourne, Camperdown, Bendigo, Traralgon, Broadmeadows, Frankston and Cobblebank.
In total, 35 of the state’s 79 local councils were represented at hearings.
“I would especially like to thank those who took the time to appear before the Committee to give evidence in public hearings,” Ms Purcell said.
“The Committee greatly appreciated the effort made by these witnesses.”
MAV welcomes report
The Municipal Association of Victoria (MAV) has reacted positively to the release of the report, noting that the report drew directly from MAV’s submission to the inquiry, and evidence from councils across the state, in a number of instances.
MAV President, Cr Jennifer Anderson, said that it is clear the committee has taken seriously the weight of evidence presented before it by the MAV and councils in recognising the value of the role of local government, and the challenges councils face in continuing to deliver high quality services and infrastructure to their communities.
“The call to further investigate the impacts of cost shifting is critically important,” Cr Anderson said.
“Cost-shifting takes numerous forms and has a real-life impact on several council services; the committee calls this out in library services, Maternal and Child Health programs, early years education, and school crossing supervisors.
“After years of MAV advocacy, a small trial of betterment funding has been introduced in Victoria but, as the committee calls for, councils need to have the ability to build infrastructure back better after a disaster, so we avoid repeat repairs after every weather event.
“We’re also pleased to see the acknowledgement from the committee that the costs of infrastructure and service delivery have risen at a pace that outstrips the growth in grant funding. As a result, many Victorian councils are being forced to make hard decisions about which essential community services to stop delivering.”
Cr Anderson said that the MAV is particularly pleased to see the committee’s recommendations address nine of the ten systemic recommendations raised in its submission, as well as the majority of its service delivery recommendations.
“The MAV will continue to advocate for the recommendations within the report and other key challenges like the Fire Services Property Levy, money collected each year through the landfill levy into waste minimisation and resource recovery, and exempting councils from the Windfall Gains Tax.
“We thank the Committee and will continue to advocate for councils to be a constructive and critical delivery partner to the State Government as we support inclusive, resilient communities and thriving neighbourhoods and towns across Victoria.”
