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Newcastle Herald
Newcastle Herald

Cost-shifting 101: a repeat lesson for local governments

This week, the Treasurer, Jim Chalmers, stood in that green room and gave a feel-good speech on what the federal budget would deliver to people across the nation's great divide.

A $300 electricity bill rebate to billionaires and people below the poverty line alike, that was my favourite.

The budget looks good, as you are getting a tax break, but it's forcing local governments to pick your pockets anyway.

It is the oldest cost-shifting exercise in the book: they will give you a tax break, then not fund your local government area correctly so then they will get it back off you, shifting the blame so they can win an election.

Well done, Dr Chalmers, and thanks for the need to apply for higher rates.

This year, the government will increase the Federal Assistance Grants scheme by $155 million.

This is far below the increase promised by this government at the election, and it has to be shared around 537 councils nationwide.

That is $288,000 for each council, but it is not actually, because of the way that the Federal Assistance Grants are delivered.

The City of Sydney, a relatively rich council, will receive a higher portion of the $155 million than the Upper Hunter Shire, a poor council by comparison.

This forces the Upper Hunter to investigate a Special Rate Variation (SRV), which may not be approved.

Neither the federal nor state governments trust local governments to make decisions on their own.

Therefore, local governments have to ask for more each year just to maintain themselves, like Oliver Twist holding up a bowl for another portion of dirty dish water.

In the past 10 years, there has been only one rate peg in line with CPI, and that was last year.

Councils have not been able to keep up with inflation, staffing costs, cost of living, material costs or fund projects that their constituents require of them.

They have to go hat in hand to their 'Big Brothers' to ask for funding.

In most cases, NSW rates only cover staffing costs.

So what did the budget actually deliver for you this week?

Not much.

You will keep your lights on for a little while and get a tax break, but you're in for pain anyway because your roads haven't been funded correctly.

You aren't getting a financial break on the waste and clean and green energy that the federal government is championing.

This is because this industry is majority owned by international corporations, meaning that the billions handed out to them in the budget will leave our shores through myriad off-shore wind farms and the Caman Island bank accounts of BP and Engie executives, all to the detriment of the nation's ratepayers.

You can see why the government doesn't call rates "taxes", it's easier to cost-shift to local governments if they aren't asking for the same thing.

At a conference in Sydney last week, the NSW Minister for Local Government, Ron Hoenig, warned country mayors, who are leading the most financially challenged and frugal shires in the state, to be aware of the cost-of-living crisis.

Yes, we are well-aware of the crisis, which is coupled with a housing shortfall, rural health crisis, education crisis and just generally being forgotten by Sydney-based governments.

I found it laughable that Mr Hoenig, in one breath, reminded us that, as councillors, we were the closest to our constituents because we saw them in the supermarket, pubs and out and about in the community. Then, in another breath, he warned us about the plight of those same people, who we know better than him.

Talk about tone deaf.

So heed this warning: take your tax break and squirrel it away.

While the government has made you feel good about it this week, true to form, it will soon tell you the money will need to be used as part of another entity's funding.

Cost shifting: the bane of local governments since their inception.

James Burns is the deputy mayor of Upper Hunter Shire Council.

This is his own opinion.

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