There are 128 local councils in New South Wales and this month the new Minns Labor Government decided to demonstrate that it too knows how to cost shift onto the third tier of government just like the preceding Baird-Berejiklian-Perrottet coalition state government.
Minns and Cabinet decided to test the waters with the Emergency Services Levy on 28 April 2023.
From local councils, Revenue NSW collects payments that account for 11.7% of the costs of fire and emergency services in NSW. From insurers of property in the state it collects the remainder of the levy which is paid as part of insurance premiums. Payment is in four instalments over the relevant financial year.
In 2022-23 the Revenue NSW collection target for the Emergency Services Levy was $1.17 billion, with local councils paying est. $143 million of that total. It would appear that the 2023-24 target is significantly higher, with the total annual local government contribution expected to rise to est. $219 million - a 53.1% increase.
According to Clarence Valley Council's financial statements: in the 2019 financial year the Emergency Services Levy cost to council was $952,000; in 2020 it rose to $995,000; in 2021 it rose again to $1,131,000; and in 2022 this cost fell to $752,000.
As late as September 2022 IPART had been telling local government that: The NSW Government has undertaken to fully fund the increase in councils’ 2023-24 emergency services levy (ESL) contributions, so the rate peg does not include increases in the cost of the ESL.
Local Government NSW, News,1 May 2023:
Emergency Service Levy increase will be catastrophic for councils
The newly elected NSW Government has kicked off its first term in the worst possible way by sending NSW council budgets into meltdown, forcing them to shed jobs, close services and scrap infrastructure plans.
Councils’ peak body, Local Government NSW (LGNSW), said the decision to apply sky-high increases in the Emergency Services Levy (ESL) would be catastrophic for many councils, and could see some become insolvent.
LGNSW said that for some councils the unexpected cost hit would all but wipe out any IPART-approved rate rise, shredding budgets already under massive pressure from the combined impact of the pandemic, extreme weather events, high inflation and wage increases.
The ESL is a cost imposed on councils and the insurance industry to fund the emergency services budget in NSW. The majority is paid as part of insurance premiums, with a further 11.7 per cent picked up by councils and 14.6% by the State Government itself.
“The ESL is an absolutely blatant cost shift by the State Government,” LGNSW President Cr Darriea Turley AM said.
“To make things worse, the ESL has seen stratospheric increases year-on-year to make up for the Government’s unfunded workers' compensation liability for emergency services workers struck down by a range of cancers.
“Now it appears councils are being asked to fund massive rises in emergency services budgets, including a 73% increase in the budget allocation to the State Emergency Services (SES).
“The levy increase for the State’s 128 councils in 2023/24 alone sits just under $77 million.
“To put that in perspective, Hay Shire Council will immediately lose 88.6 per cent of its approved rate rise to the ESL, while Bourke Shire Council will lose 94%, Yass Valley Council will lose 96%, and Tenterfield will lose 119%.
“Hornsby council will lose about 75% of its approved rate rise.
“This is an alarming development coming late in the council budgeting cycle and well after the IPART’s rates determination for 2023-24.
“The effect will leave some councils with insufficient funds to cover cost increases in other areas. These costs will need to be met by cuts to staff and services.”
Cr Turley said the local government sector’s fight was not with emergency services workers, but with a duplicitous and financially unsustainable funding system.
“I’m seeking urgent talks with Treasurer Daniel Mookhey where I will ask him to work with councils to develop a fairer funding system,” she said.
“This shock increase comes at a time when council budgets are still struggling with flood and bushfire disaster recovery.
“When you factor in the inflation and soaring costs we are all facing across the full gamut of our operations, the immediate future looks particularly bleak.
“We are urgently calling on the Government to:
restore the subsidy for 2023
unshackle this payment from council rates
develop a fairer, more transparent and financially sustainable method of funding the critically important emergency services that benefit us all.”
Clarence Valley Council, Our Performance, 2023/2024 Operational Plan, excerpt, May 2023:
The Draft Budget does include a 5.4 per cent rate peg which assist to cover cost escalations beyond Council's control such as costs related to materials and constructions, which are up 37 per cent, fuel and utilities, and the Local Government State Award salary and wage negotiations. The recent NSW Government decision to not subsidise the increase in the Emergency Services Levy adds a further strain on Council's resources.
The Echo, article excerpt, 5 May 2023:
At yesterday’s Tweed Shire Council (TSC) meeting it was revealed that the TSC had received the equivalent of a $540,000 levy, a significant increase on what was expected, drawing a quick response from councillors at the ‘bizarre’ and ‘unbelievable’ levy that is putting council in an ‘untenable position’ according to Tweed Mayor Chris Cherry.
The Emergency Services Levy is a contribution paid by all councils that funds all the emergency services across that shire. The issue is that the state government has not only significantly increased the levy, they have removed the subsidy that councils were previously receiving.
‘The $540,000 represents the equivalent of a 0.85 per cent rate increase,’ explained Tweed Council’s general manager, Troy Green.
‘That represents one-third of the special rate variation (SRV) that we’ve asked for.’
The Council can not use the SRV to pay for the levy as, if approved, it would have to be spent on the areas identified in the request for the SRV.
‘Council unfortunately has received this notification outside our rating cycle. So we have not been able to factor this in,’ said Cr Cherry.
The Council had budgeted for a four per cent increase in the emergency services levy, however, the increase by the state government for the next financial year is 24.28 per cent.
