Local councils forced to front $77 million emergency services levy

By LAUREN FROST

The decision to increase the Emergency Services Levy (ESL) could have Councils scrounging for funds. The NSW Labor Government has decided to cease the ESL subsidy, leaving councils to front the cost of total of $77 million in unforeseen emergency services cost.

The ESL is imposed on councils and the insurance industry as a means to fund emergency services in NSW. 11.7% of the ESL is paid for by councils with another 14.6% paid by the state government and the remainder paid as part of insurance premiums.

However, for the past several years local councils’ portion of the ESL has been subsidised.

In 2019, following an 18.5% increase in funding to Fire and Rescue NSW and a 73% increase to the State Emergency Service, council backlash led to the former Berejiklian Government announcing a “one-year reprieve” for councils regarding the ESL.

Although this reprieve was intended to last a year, it has been ongoing. Now, local councils are about to suffer the pressures of the levy once again.

Local Government NSW weighs in

Local Government NSW (LGNSW), the Councils’ peak body, has said that the ramifications of this decision could be catastrophic for councils, however, a spokesperson for the NSW Government insists that the ongoing ESL top-up from the State Government was “never guaranteed”.

“As the payments to cap ESL contributions at 2019/20 levels was ad-hoc and not budgeted for, ideally, local governments will have been budgeting for the full emergency services levy, including any increases, since 2019-20,” the spokesperson said.

“Our emergency services agencies have long been funded through this cost sharing arrangement – local government contributions to the cost of emergency services date back to the 1800s.”

“The contributions made by local councils to emergency services are determined through legislative requirements. These legislative requirements have not changed,” the NSW Government spokesperson continued.

“This increase was approved by the former government and the Government did not have the time to engage with the process without jeopardising the funding arrangements for emergency services.”

Newly elected NSW Government has kicked off its first term in the worst possible way by sending NSW council budgets into meltdown, forcing them to shed jobs, close services & scrap infrastructure plans, by increasing the Emergency Service Levy.

Read more https://t.co/NsYKDN7mtD pic.twitter.com/th4F2JhliA

— Local Government NSW (@LGNSW) May 2, 2023

However, LGNSW President Cr Darriea Turley AM called the move by the state government an “absolutely blatant cost shift”.

“To make things worse,” Cr Turley continues, “the ESL has seen stratospheric increases year-on-year to make up for the Government’s unfunded workers’ compensation liability for emergency services workers struck down by a range of cancers.

“Now it appears councils are being asked to fund massive rises in emergency services budgets, including a 73% increase in the budget allocation to the State Emergency Services (SES).

“The levy increase for the State’s 128 councils in 2023/24 alone sits just under $77 million,” Cr Turley said.

“The effect will leave some councils with insufficient funds to cover cost increases in other areas. These costs will need to be met by cuts to staff and services.”

Sydney councils “very concerned” over levy

City Hub reached out to several local councils for comment.

A spokesperson for the Waverley Council said they are “very concerned by the increased cost to Council and what this may mean to us in terms of service delivery.”

“The impact to Waverley Council’s annual budget of the approximately 12% increase in the Emergency Services Levy is expected to be around $450,000.  This increase is not currently funded in our draft 2023/24 budget.”

“Waverley Council is assisting Local Government NSW in advocacy efforts to the NSW Government and we call upon the Minister to urgently review this cost-shifting exercise.”

Likewise, a City of Sydney Council spokesperson said they are “in the process of reviewing and considering the impacts of this increase on our operating budget.”

Cr Turley has urged the State Government to reconsider their decision to end the ESL subsidy and insists the local government’s frustrations lie on the financially unstable funding system and not on emergency service workers.

“I’m seeking urgent talks with Treasurer Daniel Mookhey where I will ask him to work with councils to develop a fairer funding system,” she said.

“This shock increase comes at a time when council budgets are still struggling with flood and bushfire disaster recovery.”

“When you factor in the inflation and soaring costs we are all facing across the full gamut of our operations, the immediate future looks particularly bleak.”

Cr Turley says LGNSW is calling on the Government to “restore the subsidy for 2023, unshackle this payment from council rates, [and] develop a fairer, more transparent and financially sustainable method of funding the critically important emergency services that benefit us all.”

The spokesperson for the NSW Government has said that, “The NSW Government recognises that councils are facing increased cost pressures and is focussed on ensuring the sustainability of the local government sector.”

“The NSW Labor Government has committed to implementing a review of financial modelling for councils, with a lens on the increasing cost burdens on residents, and we remain committed to that promise.”