SMALLER regional and rural councils are facing funding challenges, according to a review of national and international councils, with Wellington Shire acknowledging limited opportunities to generate additional income.
The report, ‘Alternative Sources of Income for Local Government’, found no single idea or even group of ideas from across Australia or overseas can generate significant alternative revenue for small councils representing small communities.
The report by SGS Economics and Planning was commissioned by Rural Councils Victoria. It examined options across Australia and similar jurisdictions, including the UK, Canada and New Zealand.
Internationally only two councils, one in Canada (City of Saint John) and one in New Zealand (Hauraki District Council) managed to raise more than five per cent of income from ‘other’ (non-rates, non-fines, non-government) sources.
Rural Councils Victoria chair, councillor Mary-Ann Brown, said that to ensure equitable access to the services small communities need and deserve, the state and federal governments should step up.
“This report highlights that while some opportunities for raising additional revenue exist, these are extremely limited, require levels of resourcing beyond the capacity of many rural councils, and will not resolve broader structural funding challenges,” Cr Brown said.
“The report found that the majority of local governments across the UK, Canada and New Zealand also have low levels of ‘other’ income sources, and maintain reliance on funding from government grants.”
Responding to the report, Wellington Shire Council Mayor, Ian Bye, said that rural and regional councils had “much bigger income raising issues than metro councils”.
“By way of example, Wellington Shire Council is 10,800 square kilometres in size, has a population of 44,000, and looks after over 3000 kilometres of sealed and unsealed roads. The City of Stonnington, covering the inner south-eastern suburbs of Melbourne, is 26 square kilometres, has 107,000 residents and has 260 km of roads,” Cr Bye said.
“Stonnington collects over $22 million per annum in car parking and traffic revenue, but like most rural councils, Wellington collects no revenue from paid car parking. The ability for smaller regional councils with dispersed populations to generate additional income is significantly limited.”
At a national level, there are 537 councils that collect about 3.5 per cent of total Australian tax revenue via rates – the remaining 96.5 per cent of all taxes are collected by state and federal governments. Councils look after one-third of all public assets in Australia, around $530 billion including roads, bridges, buildings, land, machinery and equipment.
When asked by the Gippsland Times what services Wellington is missing out on because of poor funding from the state and/or federal government, Cr Bye said that the lack of access to health, education and transport services comes up during community consultation.
“Regional councils either have no or limited public transport options. In Wellington, for example, access to our closest university – Federation University located in Churchill – is a significant distance, even by car. Accessing this campus via existing public transport is challenging for people living in Wellington,” Cr Bye said.
“Smaller towns like Yarram often struggle to attract health professionals, meaning residents face a long journey to Sale or Traralgon to access suitable healthcare, one that is not made easier by current limitations on state-run public transport.
“Childcare and early learning options are also much more difficult to access in rural communities. High demand in metro areas means private providers will fill the demand, but often councils need to step in and either partly fund, own, or even operate some centres because of lower numbers.
“Yet the need for young families to have access to affordable early learning is just as great, and more important than ever.”
Councils, including Wellington, have looked for alternative ways to raise revenue that don’t come from government funding, rates and fines to help deliver services.
“Councils provide many services, and some are not necessarily profitable for the private sector to operate or maintain, such as pools, roads, recreation reserves, libraries and open spaces. However, we prioritise these services to create healthy, connected, and liveable communities,” Cr Bye said.
“We see opportunities in sourcing additional community financial support through partnering with new industries and investors, and are continually looking at reducing our expenses in service delivery.
“Reducing services is always challenging – even our services that are used by only a few people are extremely valuable to those people and their community.”
Cr Bye said Wellington Shire continued to make submissions to the federal and state governments about revenue raising issues, including some of the fundamental inequity issues that arise from levying rates based on property valuations.
“Wellington Shire Council believes that there needs to be fundamental changes to the way local government funds its services. However, both federal and state governments have at this point been reluctant to implement significant change,” he said.
Cr Brown said Rural Councils Victoria would advocate for more government funding to support rural communities as a matter of urgency.
“In an era of surging inflation and natural disasters, small rural communities urgently need additional resources for roads, aged care, childcare, libraries and other community services,” Cr Brown said.
