A review of the local government sector has called on the state government to provide $25 million in new funding to help the sector boost its services and capabilities.
A review of the local government sector has called on the state government to provide $25 million in new funding to help the sector boost its services and capabilities.
The systemic sustainability study concluded that the sector faces major challenges and needs to secure more revenue, strengthen its financial and planning disciplines and move to regional delivery of services.
It also recommended that local councils should borrow more money to help them deal with limited financial resources.
The review was commissioned in January by the WA Local Government Association and chaired by Curtin University’s Professor Greg Craven.
Study group member George McCullagh said more than half the state’s local councils were at risk of being financially unsustainable, and there was a $1.7 billion shortfall on infrastructure funding.
A chronic shortage of skilled and experienced workers was another major problem facing the sector.
“There is a capacity issue that frankly will require a sector response rather than council by council resolution,” he said.
Mr McCullagh said the study group found plenty of problems, but also identified some positives.
“There is a recognition about the way the industry needs to go, which is around the pooling of resources and a more strategic approach to common issues, rather than trying to fix problems by yourself,” he said.
“We were struck by the amount of innovation in the industry. What we struggled to find was systemic use of those innovations.”
Most other states had already conducted a similar review, although WALGA president Bill Mitchell said there was a crucial difference in WA's case.
“WALGA instigated the study prior to any structural reform,” he said.
Mr Mitchell pointed to the example of South Australia, where 114 local councils were reduced to 68 councils.
A review subsequently found that about 30 of the new councils were not viable He added that the relationship with the state government had deteriorated, after popular local government minister John Bowler was replaced by Jon Ford, who is offside with the industry association.
“When we started this structural reform investigation, we had the backing of the state government and the minister,” Mr Mitchell said.
“We don’t have that any more, and that is a real issue.”
The study group concluded the state government needed to lift its funding beyond the $3 million currently provided under the Connecting Local Government initiative, which was designed to help local councils move toward regional service delivery.
“The magnitude of the task parallels the size, shape and sustainability project being undertaken in Queensland, where $25 million has been provided by the state government,” it said.
The report said the funding should primarily be used to provide incentives to local councils wanting to pool or share resources, or go the next step to amalgamation.
It recommended that individual councils review their debt funding so that a modern and efficient capital management approach can be adopted.
It also advocated increased use of developer charges and a more transparent and sustainable funding model for roads.
The review group believes that general funding grants should be tied to a new cost index that more accurately reflected the costs faced by local councils.
For councils in high growth areas, it suggested bilateral funding with the state government and potentially the establishment of development agencies to share risks and costs.
The sustainability study emphasised that local councils needed to strengthen their financial and planning disciplines.
Specific proposals include the establishment of 10-year asset management plans that provide details of how infrastructure will be upgraded and replaced.
It said these plans should be a precondition for extra funding.
Another theme of the report was the need to invest in the skills and capabilities of both council staff and councilors the mselves, which could include extra training programs.
WALGA has established a taskforce to establish implementation plans for the recommended changes ahead of an industry summit.
