PricewaterhouseCoopers study into local government sustainability launched
December 4, 2006
See also: PwC Report
A report into local government funding by PricewaterhouseCoopers has found that 10-30% of councils have significant sustainability issues and that there is an estimated $14.5b backlog in infrastructure renewal work.
The study commissioned by the Australian Local Government Association (ALGA) recommends the establishment by the Australian Government of a $250m local community infrastructure renewals fund.
"Local government is responsible for around $13b in community infrastructure, much of which was established in the 1950s or earlier and is reaching its use-by date," ALGA President Cr Paul Bell, AM, said today. "This community infrastructure is at the very heart of local towns and communities and includes libraries, ovals, walking tracks, community centres, public halls, senior citizens' centres, swimming pools and playgrounds."
The report says the backlog in infrastructure renewal has resulted from the growing gap in many councils between their revenue base and the funding required to deliver a broader range of services as well as maintain and renew the infrastructure which supports these services.
It says the problems facing councils are rising community expectations, expanding scope of services, constrained revenue opportunities, operating deficits, deferral of renewals, and infrastructure backlogs.
The report calls for federal, state and territory governments to provide greater support to help local councils with sustainability challenges to better meet the needs of their communities.
Cr Bell said that the report's finding showed that local governments needed to be put on firmer financial footing otherwise councils would be forced to cut services and provision of community facilities.
"Local government is playing its part with internal reforms through amalgamations, outsourcing of non-core operations, shared services between councils, and improved capacity to raise revenue through services," he said. "While more can be done to achieve greater cost efficiencies, this will not be enough to balance the books of many councils, which are caught in a cost versus revenue squeeze which is not of their own making."
PricewaterhouseCoopers recommend a twin-track approach for improving financial sustainability through the pursuit of further internal efficiency reforms and changes to intergovernmental funding.
Cr Bell said the Financial Assistance Grants received from the Federal Government were simply inadequate, adjusted annually through CPI and population measures, while actual costs were rising at CPI plus 2-3%.
"It is time local government gets a fair share of funding through direct taxation revenue. Unlike the state, local government does not have access to a growth tax such as the GST."
The PwC study findings back up research commissioned by four states - NSW, Vic, SA and WA - and the State of the Regions report 2006-07 released last week.
The PwC report is available on the ALGA website: www.alga.asn.au/pwc
- Contact
- Amanda Lynch, ALGA - 0419 123 862
- Mathew Ward, PwC - 0404 979794
