GIVE local government a share of GST revenue, urges the Review Today consulting group in its latest financial analysis of NSW councils.
It's a fair request, and unless some similar measure is adopted, Review Today asserts, more and more of the state's councils will be forced into financial "unsustainability".
According to the consulting group, 35 of the state's top 100 councils are already unsustainable and another 19 are "vulnerable". That doesn't mean they are insolvent or anywhere near going broke, but it does mean their debt plus their backlog of community infrastructure repair work add up to an uncomfortably high figure relative to their annual revenue.
It is no secret that many councils in NSW are facing an infrastructure crisis and Review Today points a good deal of blame for this at the State Government. The report says NSW is the only state that pegs local government rates. It points out that the state government is a keen cost-shifter, ever alert for opportunities to fob off expensive jobs to councils, but never anxious to provide funds. And the report notes the recent move by the NSW Government to reduce the scope of councils to impose levies on property developers, appropriating yet another source of income for itself.
Newcastle, which is responsible for maintaining a large number of major regional assets, is naturally among the "unsustainable" group of councils. For the city to catch up on its infrastructure backlog already more than $130 million it will have to increase its rates by at least 80 per cent over the next 10 years.
That is scarcely feasible. It's more likely that the city's roads, buildings, drains and parks will simply continue to degrade until the crisis becomes too massive for even the Government to ignore.
Unless, of course, the growing call for an overhaul of local government financing is heeded and Australia raises the proportion of its gross domestic product distributed to local government from a contemptible 2.3 per cent to something closer to the double-digit allocations found in Europe (12.7 per cent) and Japan (15.1 per cent).
If councils want this to happen, however, they will have to counter their spendthrift image. After all, perceived council extravagance is what prompted rate-pegging in the first place.
Feeding the dragon
THE prospect of Chinese government-owned investment companies buying the right to explore and exploit large NSW coal deposits is a political hot potato. China is flush with cash, eager to secure long-term access to minerals and energy and able, it seems, to outbid the usual multinational contenders for prime coal country near Gunnedah. Chinese interests have already staked claims to iron ore and other Australian resources and China sees direct ownership of mines as a counter to the rising prices being asked by the multinationals. It's a tricky spot for Australia, which would welcome the capital, but could do without the geopolitical and strategic issues that necessarily arise.
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