Why Councils Claim They Can’t Save Money for Pools and Libraries

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Stonnington Council estimated the package – which was rejected after a backlash from the property industry – would have cost its budget more than $1.3 million, or about 1% of revenue from rates and charges.

The federal government has also been accused of cost shifting following its budget tabled last month, increasing financial aid grants from 0.6% to 0.55% of Commonwealth tax revenue.

The Australian Local Government Association has called for grants, temporarily frozen by the Abbott government, to be restored to 1% of tax revenue to boost council budgets by $2.3 billion.

The Victoria government has set a 1.75% cap on rate hikes for 2022-23, after five years of rate caps. Businesses and landlords pay the rates as a percentage of the value of their property, which accounts for nearly half of all council revenue but only 3% of all government revenue in the country.

A government spokeswoman said the capped system was introduced to limit runaway rate hikes and reduce pressures on the cost of living.

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The Center for Future Work in December estimated the caps would reduce gross domestic product by up to $890 million this year, in research commissioned by the Australian Services Union, by limiting employment and spending.

Moreland Council socialist representative Sue Bolton said cost shifting was eroding the council’s ability to pay for services, particularly in a rate-capped environment.

“But then my personal feeling is that rates are not a very fair way to fund advice,” said Cr Bolton, who voted against the rate hikes.

Taxpayers in Victoria, who think the rate cap is a farce because individual bills could still rise two or three times as much due to the boom in the housing market, say the Andrews government has pushed away almost all the blame of the state on the advice.

A spokeswoman said residents were worse off, with councils leaving potholes in footpaths and only collecting recycling fortnightly in some municipalities.

Monash Council in Melbourne’s southeast recently considered scrapping its funding for school crossing supervisors, in what it sees as a state government responsibility, but is funded at around 50-50.

Campaspe Shire Council, which includes Echuca and Kyabram in the upstate, has also complained of increasingly picking up the cost of the service, with the Victorian government paying 35% of the cost of council crossing officers.

“The issue of shifting costs from state to local government for the delivery of programs and services has long been of concern to council,” Campaspe councilors agreed at a meeting in February.

David Clark, chairman of the Municipal Association of Victoria and councilor for the Pyrenees Shire, which includes Avoca in the mid-west of the state, said the transfer of costs was hurting council budgets.

“This forces councils to have difficult conversations about the services they currently provide, despite the fact that we know every council in the state is being asked to do more by their communities, not less,” Cr Clark said.

Boroondara Council could this week decide to stop providing home-based aged care services in a decision that would shift 2,119 people to private providers, although the Australian Services Union expects the decision to be delayed after filing a case with the Fair Work Commission.

Kathryn Arndt, chief executive of the Victorian Local Governance Association, said the fee cap restricted councils’ autonomy to act as they saw fit.
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