Local governments in Victoria have had their say about the reduction in state and federal funding for councils across the state.
Their verdict? The reduction combined with the two per cent rate cap has left small rural councils struggling to maintain local services and assets.
The Municipal Association of Victoria (MAV) presented at a public hearing of the ongoing inquiry into the Victorian government’s rate capping policy.
MAV President Cr Mary Lalios said financial projections produced by Local Government Victoria indicated that capital spending in small rural shires would decline by 30 per cent from 2016-2020.
“In the next two or three years we are going to see serious impacts on councils’ ability to meet their community service and asset renewal obligations, particularly in smaller councils,” Ms Lalios said.
She said rural councils each lost around $1 million a year for their local road maintenance when the state government did not renew the Country Roads and Bridges Program in 2015.
“On top of this, the federal government’s three-year freeze of Financial Assistance Grants indexation cost Victorian councils around $200 million for local infrastructure and community services,” she said.
“While we welcome the federal government’s decision to restore indexation, the three-year freeze has left a significant ongoing funding gap.”
She urged that “it is critical” that these funding cuts are reversed.
“Under the two per cent rate cap, we are starting to see small councils really struggling to deliver services and capital works programs.”
Ms Lalios said the MAV had successfully lobbied the state government to restore several vital funding partnerships, to try to ease the financial burden on councils.
“The MAV is working hard to help councils achieve financial sustainability. Last year we achieved a 15.8 per cent funding increase for Maternal and Child Health services, restoring the 50:50 partnership between local and State Government,” Ms Lalios said.
“We have also successfully restored the 50:50 partnership agreement for the school crossings supervisor program. Before this, councils had been contributing as much as 80 per cent. We welcome the restoration of 50:50 funding, but we do acknowledge that there is still lots of work to do in this area.”
According to Ms Lalios, the ball is now in the state and federal governments’ court, as she called on them to restore the funding they have cut for local community infrastructure and services to ensure that rural communities are not negatively impacted.