Narrandera Shire Council will join protests from other local government councils in representations to the Treasurer, the Minister for Emergency Services, the Minister for Local Government and local State Member Steph Cooke in expressing their strong opposition to the NSW Government’s last-minute decision to impose an enormous Emergency Services Levy (ESL) cost increase on councils for 2023-24 by scrapping the ESL subsidy for councils and at a time after Council has publicly advertised its Operational Plan and annual budget to the community.

As a consequence of the unannounced 73 per cent increase in the State Emergency Service budget and an 18 per cent increase in the Fire and Rescue NSW budget, Council’s 3.7 per cent rate increase to provide essential community services and infrastructure has been significantly eroded and will lead to the cancellation of necessary infrastructure projects.

Narrandera Council is calling on the NSW Government to take immediate action to:

• Restore the ESL subsidy in 2023-24
• Urgently introduce legislation to decouple the ESL from the rate peg to enable councils to recover the full cost
• Develop a fairer, more transparent and financially sustainable method of funding critically important emergency services in consultation with local government.
• Write to the Chair of the Independent Pricing and Regulatory Tribunal (IPART) advising that Council’s forced emergency services contribution is manifestly disproportionate to the 2023-24 rate cap, which has resulted in additional financial stress.

Council will also write to the President of LGNSW seeking the Association’s ongoing advocacy to bring about a relief in the burden of Councils’ emergency services contribution.

“The ESL is a cost imposed on councils and insurance policy holders to fund the emergency services budget in NSW. The majority is paid as part of insurance premiums, with a further 11.7 per cent funded by councils and 14.6 per cent by the NSW Government. The ESL represents cost shifting at its worse, as it is imposed on councils without any mechanism for councils to recover costs,” Mayor Kschenka said.

The levy increase for the State’s 128 councils in 2023-24 amounts to almost $77 million, with the total cost imposed on the local government sector increasing from $143 million in the current financial year to $219 million next year. This represents a 53.1 per cent increase, completely dwarfing the IPART baseline rate peg of 3.7 per cent for 2023-24, and subsequently Council’s rate increase of 3.7 per cent.

Reporting suggests that the increase in costs this year reflects a 73 per cent increase in the State Emergency Service budget and an 18.5 per cent funding increase to Fire and Rescue NSW. The impact of these large increases on councils’ finances will be particularly severe in 2023-24 as a result of the NSW Government deciding to scrap the subsidy for council ESL payments.

“For many councils, the unexpected cost hit will absorb almost all their IPART-approved rate rise for this year, and in some cases absorb more than 100 per cent. This is placing local government budgets under enormous pressure as they struggle from the combined impact of the pandemic, extreme weather events, high inflation, and wage increases,” Mayor Kschenka said.

IPART-approved rate rises are intended to compensate for the impacts of inflation and increases in council costs. Instead, the rate increase will have to be largely diverted to the significantly higher ESL payments this year. NSW councils will have no option other than to make cuts to infrastructure and services expenditure.

For Council, the ESL increase and removal of the subsidy amounts to $112,258 for 2023-24, bringing the total Council contribution to $362,196. This amounts to 57 per cent of the expected increase in rate income for 2023-24.

If the NSW Government’s decision is not reversed, the impacts on Council’s services, infrastructure maintenance and delivery include a reduction in Council’s Capital Works Program to fund the ESL.

“The timing of this development is particularly challenging for councils as it comes so late in the local government budgeting cycle, well after IPART’s rate determination for the coming financial year. All councils strongly support a well-funded emergency services sector and the critical contribution of emergency services workers and volunteers (many of whom are councillors and council staff,” Mayor Kschenka said.

“However, it is essential that these services be supported through an equitable, transparent, and sustainable funding model.”

Local Government NSW has raised the serious concerns of the local government sector with the NSW Government and is seeking the support of councils across NSW in amplifying this advocacy.

Other local councils are also reeling after learning the NSW Government will not subsidise the increase in the Emergency Services Levy this year. Local Government NSW president Darriea Turley said the levy is a cost imposed on councils and the insurance industry to fund the emergency services budget in NSW such as the Rural Fire Service.

“The majority is paid as part of insurance premiums, with a further 11.7 per cent picked up by councils and 14.6 per cent by the State Government itself,” Ms Turley said.

The government’s change was “blatant cost-shifting”, she said.

“This decision will have a catastrophic impact on council budgets, with the ESL contribution by councils totalling somewhere around $77 million.”

Hardest hit will be the rural and regional councils with small rate bases and a relatively large RFS component, Ms Turley said.

This article appeared in the Narrandera Argus, 18 May 2023.