MORNINGTON Peninsula Shire wants an inquiry into services for ratepayers being “jeopardised” by state and federal governments finance cuts.
A lengthy, but unattributed report tabled at the council’s Tuesday 20 February public meeting, says government cost shifting will add $38 million to shire expenses in 2023-24, blowing out to “a staggering” $234 million over the next five years.
The increased costs and reduction of government grants is “jeopardising both the provision of essential services and the financial sustainability of local governments”.
Shire CEO John Baker said the shire was considering arranging for a meeting of “a range of [Victorian] mayors” to have a “poltical conversation” about government cost shifting.
The report says cost shifting occurs when state and federal governments expect councils to maintain service levels while grants are reduced and by expecting local government to expand their services without adequate resources.
Areas for which local governments have been mandated to provide and which are vulnerable to the cuts include kindergartens, waste recycling and the management of foreshores.
In the current year, more than $5 million is expected to be spent by the shire on street lighting ($2.5m), extreme weather events ($2m) and the October council elections $800,000).
“Regrettably, these mandates [imposed by the state and federal governments] often come without sufficient funding, considering the level of service expected,” the report states.
“With 81 per cent of MPSC’s revenue originating from rates, the council finds itself in a precarious position, shouldering the brunt of these shifted costs.”
The state government’s Fair Go Rating System – which limits annual increases to council rates, or rate cap – is seen as “a thorn in MPSC’s side” that challenges its long-term financial viability.
“The system curtails the council’s ability to generate necessary revenue for maintaining service standards and investing in community assets.”
A significant surge in local government expenses has led to a “downward trajectory” in the shire’s ability to deliver services and renew infrastructure.
“Regrettably” local government had a “limited arsenal” to counteract cost shifting.
The report lists “viable strategies” as trimming spending in some services; using the budget surplus normally used for capital works; seeking an exemption from the rate cap; and lobbying for more money funding from the state and federal governments.
Cr David Gill, who successfully moved that the shire “asks the state government to review the range of council services provided in light of government cost shifting of their responsibilities onto ratepayers”, said it was the first stage of a broader campaign.
“I don’t know how the state and federal governments get away with the lack of scrutiny, the transparency and lack of consultation – they just make decisions,” he said.
“We go through a process and, if we make a mistake, we cop it. In my view, we just have to say sorry, and we make up for it. But when we compare ourselves to state and federal [on consulting] they don’t bother. They just get away with it.
“I don’t find too many people saying that we shouldn’t be looking after our kids in terms of safety or kindergartens, or child welfare centres. If we did start to say that I’m sure that it would make The Briars [Harry Potter show] episode into just a Sunday picnic.
“I just want us to be able to draw the line. What are the things that we don’t need? What are the ones that are not necessary?”
Cr Susan Bissinger said council should “examine everything [it does] under the microscope” and cut costs.
“We need to be cognisant of what is important and what is not. What our residents see as important and just stop with all the frilly stuff for a while,” she said.
Bissinger said she was “not a fan” of hearing complaints about rate capping “when nothing’s done about the cost savings on the other side”.
Cr Anthony Marsh agreed with “part” of what Bissinger had said: “Often councils find themselves dabbling in things maybe they shouldn’t, or maybe they should consult a bit more, and that stuff can often be expensive.”
However, most council services were things “we wouldn’t want to get out of unless we knew that it was going to be delivered properly”.
Cr Sarah Race said the cost shifting report “makes for stark reading”.
She said financing of local government differed overseas, giving the example of Germany where local governments “can’t take on anything else unless fully funded by the German government”.
Part of the ongoing discussion should be about different ways for local government to be financed.
“It can’t just be what the state and federal governments are doing to us, and it is terrible, but we also have to look at what a solution could be,” Race said. “It shouldn’t just be cost shifting, woe is us.”
First published in the Mornington News – 27 February 2024
