Minute by the Lord Mayor
To Council:
I am calling on Council to support
representations to the NSW Government in response to the highly damaging increase
in the Emergency Services Levy (ESL) imposed on all councils, and withdrawal of
the annual subsidy, without warning, for the 2023/24 financial year.
Background
The Emergency Services Levy 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.
In the 2019/20 financial year, legislative
changes increased councils' contribution to the Emergency Services Levy. In
recognition that this change significantly impacted the financial
sustainability of many councils, the NSW Government has been providing
"one-off" subsidies to offset these growing levies each year, which helped
minimise the financial impacts to councils.
The City received a subsidy of $1.07M for the
2022/23 financial year, which was 19.3 per cent of the City’s total
contribution of $5,561,515 to the Emergency Services Levy for that year.
Financial
impacts
The NSW Government’s recent decision to both
substantially increase the Emergency Services Levy and withdraw subsidies for
councils is an unexpected cost hit that will eat into any Independent Pricing
and Regulatory Tribunal (IPART)-approved rate rise. Increases in rates will now
have to be diverted to the significantly higher Emergency Services Levy
payments this year.
Councils are already under massive financial
pressure from the combined impact of the pandemic, extreme weather events, high
inflation, and wage increases.
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 Independent Pricing and Regulatory Tribunal (IPART)
baseline rate peg of 3.7 per cent for 2023/24.
For the City, the new levy represents an
increase of $2,115,595, which is 32 per cent of the City’s total contribution
($6,602,257) for 2023/24. This amounts to 17.5 per cent of the City’s expected
increase in rate income for 2023/24.
If the NSW Government’s decision is not
reversed, over time this unfair increase will ultimately impact council’s
financial position and our capacity to provide the services and infrastructure
that our community requires.
The timing of the announcements by the NSW
Government 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, and after councils have prepared their draft budgets for
consultation with their communities.
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.
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).
However, it is essential that these services be supported through an equitable,
transparent, and sustainable funding model.
With the support of Local Government NSW, I
recommend that Council call on the NSW Government to take immediate action to:
(i)
restore
the Emergency Services Levy subsidy;
(ii)
decouple
the Emergency Services Levy from the rate peg to enable councils to recover the
full cost; and
(iii) develop a fairer, more transparent, and
financially sustainable method of funding critically important emergency
services.
I also recommend that the Chief Executive
Officer make representations to the Independent Pricing and Regulatory Tribunal
(IPART) advising of the financial sustainability impacts of the Emergency
Services Levy, and that I write to the President of Local Government NSW
requesting their ongoing support for councils on this matter.
Recommendation
It is resolved that:
(A) the Lord Mayor be requested to write to the
Treasurer, the Minister for Emergency Services, the Minister for Local
Government and local Members:
(i)
expressing
Council's strong opposition to the NSW Government's decision to impose an
enormous Emergency Services Levy (ESL) cost increase on councils for 2023/24,
and for scrapping the Emergency Services Levy subsidy for councils;
(ii)
noting
that 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;
(iii)
advising
that the NSW Government's decision may impact Council's ability to deliver
important local services and necessary infrastructure in the long term; and
(iv)
calling
on the NSW Government to take immediate action to:
(a)
restore
the Emergency Services Levy subsidy in 2023/24;
(b)
urgently
introduce legislation to decouple the Emergency Services Levy from the rate peg
to enable councils to recover the full cost (in future years); and
(c)
develop
a fairer, more transparent and financially sustainable method of funding
critically important emergency services in consultation with local government;
(B)
the
Chief Executive Officer be requested to 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; and
(C)
the
Lord Mayor be requested to write to the President of Local Government NSW
seeking the Association's ongoing advocacy to bring about a relief in the
burden of Councils' emergency services contribution.
COUNCILLOR
CLOVER MOORE
Lord Mayor
Moved by
the Chair (the Lord Mayor), seconded by Councillor Scott –
That the
Minute by the Lord Mayor to be endorsed and adopted.
Variation.
At the request of Councillor Scott, and by consent, the Minute was varied such
that is reads as follows -
It is resolved that:
(A) the Lord Mayor be requested to write to the
Treasurer, the Minister for Emergency Services, the Minister for Local
Government and local Members:
(i)
expressing
Council's strong opposition to the former NSW Government's decision to impose
an enormous Emergency Services Levy (ESL) cost increase on councils for
2023/24, and for scrapping the Emergency Services Levy subsidy for councils;
(ii)
noting
that 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;
(iii) advising that the former NSW Government's
decision may impact Council's ability to deliver important local services and
necessary infrastructure in the long term; and
(iv) calling on the NSW Government to take
immediate action to:
(a)
restore
the Emergency Services Levy subsidy in 2023/24;
(b)
urgently
introduce legislation to decouple the Emergency Services Levy from the rate peg
to enable councils to recover the full cost (in future years); and
(c)
develop
a fairer, more transparent and financially sustainable method of funding
critically important emergency services in consultation with local government.
The Minute,
as varied by consent, was carried unanimously.
S051491
At this stage of the meeting, it was moved by the Chair (the Lord
Mayor), seconded by Councillor Kok –
That the Order of Business be altered such that Items 11.10 and 11.13
be brought forward and dealt with before Item 4 .
Carried unanimously.