Good afternoon and thank you for inviting me to participate in today’s hearing.
I firstly want to acknowledge the traditional owners of the land on which we gather and pay our respects to elders past, present and emerging.
My name is Alison Smith and I am the Chief Executive Officer of the Local Government Association of Queensland.
Our not-for-profit organisation has been the peak body for local governments across Queensland since 1896, established to serve the state’s – now 77 – councils and the communities they represent.
The escalating cost of living has a debilitating impact on every household across Queensland – from Coolangatta to the Cape and from Bribie to Bedourie.
It hurts the standard of living of individuals and their families and, of course, impacts the operational budgets of local councils which have a crucial role to play in ensuring the liveability of communities.
During the peak of COVID-19 our councils introduced a range of measures to help alleviate household pressures, including rate repayment extensions and waivers and payment plan arrangements. As well as supporting businesses by waiving and discounting car parking fees and footpath dining permits.
During this time, councils were incurring dramatic increases in expenditure by bringing forward capital projects to maintain local employment. They also bore the extra cost of keeping residents safe by maintaining quarantine facilities, border controls, and intensive cleaning of public facilities.
All while feeling the financial pressures from reduced patronage at public facilities and council-owned airports during lockdowns and travel restrictions.
During the pandemic, 70 per cent of Queensland councils justifiably spent up to 25 per cent more than they earned in 2020.
Councils buy, consume, and use the things that are impacted the most by rising inflation. Wages, steel, fuel, interest rates – local government is feeling the full force of the escalating cost of living.
According to ABS data, a two per cent rise in revenue for Queensland councils over the past two financial years means it has increased nowhere near the rate of their expenditure, further stretching an already strained local government sector.
The most recent rate increases imposed by our councils are nowhere near a match for the rate of inflation, the rising cost of building materials, and supply chain challenges.
Despite CPI sitting at 6% when most council budgets were set for this financial year, on average rates have gone up by only 3.91%.
The disparity between rate increases and inflation for councils is also compounded with the shortfall in government funding allocations, such as Financial Assistance Grants and Works for Queensland, which are no longer sufficient to sustain our councils.
And there’s still no indication that federally funded FA Grants will be restored to one per cent of Commonwealth taxation revenue.
In Queensland, the additional funding required to bring FA grants back to one per cent is equivalent to 23 cents per Queenslander per day. What that would do is bring the total funding pool to 52 cents per Queenslander per day.
This would inject more than $410 million back into Queensland local economies.
We propose that a major element to improving cost of living is a sustainable pipeline of grant funding to give local government the certainty to deliver projects for their communities.
Member councils recently endorsed this issue at our Annual Conference, calling for the State and Federal governments to create a channel for grant funding to support the material increase in costs on budgeted projects that are under contract and where completion is required.
Our councils are bearing increased costs for already commenced large infrastructure projects, over and above what has been budgeted. As a result, other smaller infrastructure projects, such as asset renewals and upgrades, are adversely affected.
In closing, cost pressures are additionally being compounded by the increasing amount of services and responsibilities being shifted on to councils by State and Federal governments.
The LGAQ is currently surveying the extent of cost shifting - where the cost of community liveability keeps growing and is increasingly borne by councils.
When federal and state governments decide to stop funding a program, but the community must have it continue – such as childcare, or aged care. Or when market failure leads commercial operators to pack up and leave a community – such as television broadcasting or running the local bakery or petrol station.
Initial survey results indicate that the cost of responsibilities shifted onto councils from State and Federal governments equates to almost $300 million each year.
We look forward to sharing that research as it is central to your investigations.
With that brief opening statement, I am more than happy to take any questions.