Country mayors demand action as cost shifting hits $1.5 billion

Country mayors across New South Wales have renewed calls for urgent reform after a new report revealed councils are absorbing $1.5 billion a year in costs offloaded by State and Federal governments, and it’s a burden hitting rural and regional communities hardest.

The Local Government NSW (LGNSW) report, Cost Shifting 2025: How State Costs Eat Council Rates, shows cost shifting has surged 10 per cent since 2021–22, bringing the total over the past decade to $11.3 billion. It amounts to an average of nearly $500 per NSW ratepayer each year.

Country Mayors Association of NSW (CMA) Chairman and Temora Shire Mayor Rick Firman said the findings are deeply concerning but not surprising.

“Unprecedented operational cost increases in recent years and constrained income growth make financial sustainability a mission impossible for some,” Mayor Firman said.

“It is clear that the impacts of cost shifting are bigger barriers to financial sustainability for non-metropolitan councils. Some of our rural and remote members have a small rate base that is essentially stagnant or even declining,” he said.

Mayor Firman said CMA’s 92 member councils continue to bear the brunt of State responsibilities they neither created nor control, including being forced to list Rural Fire Service assets on their books — despite not owning them — and shouldering cuts to cultural services.

“We were underwhelmed with the recent State budget, which seemed western Sydney focused. It saw further funding cuts to local galleries and other valued community services, meaning many of our member councils will carry more financial responsibility, regardless of their capacity to absorb the costs,” he said.

Deputy Chairman and Bega Valley Shire Mayor Russell Fitzpatrick said the financial squeeze is being passed on to residents.

“Cost shifting and insufficient Financial Assistance Grants have forced councils to apply for Special Rate Variations to meet increasing costs,” Mayor Fitzpatrick said. “This is obviously unwelcome at a community level, given cost of living hikes and the pressure that councillors have endured has forced some to step down in recent years.”

LGNSW President and Forbes Shire Mayor Phyllis Miller said councils are being pushed to the brink.

“Councils are at breaking point. The combination of relentless cost shifting, rate capping and inadequate State and Federal funding is eroding the sector’s financial sustainability,” Mayor Miller said.

“Nearly $500 per ratepayer in NSW is being diverted from essential local priorities like roads, libraries, sporting facilities and community programs. These are services our communities need, want and deserve, and they’re being severely compromised by councils needing to pick up the bill on behalf of the State,” she said.

Multiple local councils have also sounded the alarm, with Glen Innes Severn Mayor Margot Davis pointing to “decades of cost shifting” as part of the current financial crisis affecting many local councils in her open letter to the Prime Minister. In March, Gunnedah Shire Council estimated the cost shifting burden on its budget at $2.2 million in 2023–24 alone. Director Corporate Services Kelly Stidworthy said Council has made significant efforts to rein in spending, delivering more than $4.9 million in savings and efficiencies in recent years, but warned more unfunded mandates are likely.

“Council will continue to investigate and make cost saving and efficiency gain improvements to meet the $930,000 requirement,” Ms Stidworthy said. “But also expects further unforeseen costs and cost shifting in the years ahead.”

Mayor Miller said the solution lies in a partnership, not continued neglect.

“We need real reform — regulatory change, proper budget support and fair funding,” she said. “LGNSW stands ready to work with the State Government to finally put an end to cost shifting and ensure councils have the resources they need to serve their communities appropriately.”