NSW Government supports efficiency reforms for councils

The NSW Government has announced it will support 15 of the 17 recommendations from the NSW Parliament’s Upper House inquiry into the ability of local governments to fund infrastructure and services.

The inquiry was established in March 2024 at the request of the Minister for Local Government to examine long-held concerns from the sector about the financial challenges impacting councils across the state.

The inquiry heard cost pressures have increased significantly in recent years, impacting councils’ ability to reliably and affordably provide the services communities rely upon, especially in rural and regional areas. The NSW Government said it recognises the need to preserve local democracy and councils’ autonomy, while also ensuring they can sustainably provide services over the long term without financially burdening ratepayers.

The government has proposed five key actions:

• The Independent Pricing and Regulatory Tribunal (IPART) will continue to oversee council rates to ensure councils’ revenue keeps pace with cost changes, while protecting ratepayers from excessive rate hikes.
• Councils that want to permanently increase their rates will be required to submit a Comprehensive Spending Review to IPART that forensically examines their expenditure as well as their revenue.
• The Special Variation process will be simplified and used solely by councils to fund specific projects or programs supported by the community.
• Local government financial statements and reporting will be streamlined to increase transparency and councillor and public oversight over council spending.
• An expert advisory panel of experienced general managers, finance directors and other local government experts will be established to support the government in delivering its reforms.
   

The government will also audit local government fees and charges, to ensure they reflect inflation and changes in market costs. Models for distributing state government grants to councils will also be assessed so that councils continue to receive sustainable and equitable funding.

These reforms, alongside those already in progress — including rewriting the councillor Code of Conduct system — aim to enhance the reputation of local government as a robust, independent tier of government. They will improve transparency in decision-making and provide councillors with the financial information they need to be visibly in control of their councils to deliver local government services for their communities into the future.

“The role that councils play in building connected communities and fostering local development cannot be overstated,” said Minister for Local Government Ron Hoenig. “But the reality is, many councils are struggling under financial pressures and this is having flow-on effects to communities in the form of higher rates or reduced services.

“It’s clear the status quo is not sustainable for councils and it’s not fair on communities who will lose out. The ratepayers of NSW deserve assurance their money is being put to good use and that councils are doing all they can to tighten their belts, just like families are doing across the state.”

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