Local councils are reeling after learning the NSW Government will not subsidise the increase in the Emergency Services Levy this year.
Local Government NSW president Darriea Turley said the levy is a cost imposed on councils and the insurance industry to fund the emergency services budget in NSW such as the Rural Fire Service.
“The majority is paid as part of insurance premiums, with a further 11.7% picked up by councils and 14.6% by the State Government itself,” Ms Turley said.
The government’s change was “blatant cost-shifting”, she said.
“This decision will have a catastrophic impact on council budgets, with the ESL contribution by councils totalling somewhere around $77 million.”
Hardest hit will be the rural and regional councils with small rate bases and a relatively large RFS component, Ms Turley said.
Richmond Valley Council’s Emergency Services Levy for the coming financial year is $729,000 – a 7.5% increase on last year’s levy.
If the NSW Government’s subsidy, which has been paid for the past four years, is removed the amount payable by council will have increased by $233,850 or 47.2%.
Council’s general manager Vaughan Macdonald said this has a direct impact on the bottom line which reduces the services council can provide.
Mr Macdonald said council recognised the importance of funding emergency services at increased levels, particularly following the string of natural disasters the region had recently endured, and acknowledged government subsidies could not last forever.
“While we can handle this increase, continuation of the subsidy by the new NSW Government will be welcome as it will enable us to provide additional services to our community,” Mr Macdonald said.
The issue will be discussed at the May 16 council meeting.
Kyogle Council has two motions listed for the Kyogle Council meeting on May 8 in response to the Emergency Services Levy (sometimes called Contributions) announcement.
Councillor Danielle Mulholland put a motion forward to be discussed at the council meeting.
The motion is: That council put forward a policy position regarding the Emergency Services Contributions which includes not removing the subsidy until the State Government allows these contributions to be considered outside the rate pegged permissible income.
Ms Mulholland said the new Minister for Local Government Ron Hoenig attended the Local Government NSW board meeting on April 21 to discuss the new government’s position on various issues.
The key points from his presentation were:
1. There will be no ongoing subsidy of the emergency services contributions.
2. All funding and grants have been frozen until they can be reviewed to ensure appropriateness and transparency.
3. Future requests for State Government funding are unlikely to be given consideration until such time as a full review of the budget has been completed.
In any case, it appears that funding will be significantly curtailed for an indefinite period.
This not good news for rural councils.
The removal of the emergency services contributions subsidy, without a review of the rate pegging system, will devastate the bottom line of most rural councils, Ms Mulholland said.
Mayor Kylie Thomas has listed a motion for the council meeting about the action the council can take including writing to the NSW Minister for the Department of Emergency Services, to the NSW Minister for Climate Change, Energy, Environment and Heritage and the NSW Minister for Local Government seeking a review to change how the ESC is linked to the rates by setting it outside the rate income received.
“Whilst we value and depend on the emergency service sector and greatly appreciate all the work they do in times of need, we must seek a way to adequately and efficiently structure how it is paid for,” Ms Thomas said.
Ms Turley said the changes would send 2023-24 council budgets — which were subject to a rate cap of 3.7% — into meltdown.
The change means an extra $77 million will need to be found collectively by 128 councils across NSW.