The $500 burden every Sydney ratepayer is carrying

Households are forking out $500 each in their council rates for services once funded by state and federal governments.

This practice, known as cost shifting, occurs when councils are forced to foot the bill for state or federal services or infrastructure they aren’t funded to deliver.

Cost shifting placed a $1.5 billion financial burden on ratepayers last year – roughly $500 per household – in 2023-24, a report by Local Government NSW found. It is a 10 per cent increase on 2021-22, and represents a cumulative $11.3 billion over the past decade.

Cost shifting amounted to $1.5 billion in 2023-24, or an average of $497.40 per household.Credit: Dominic Lorrimer

The primary drivers of this cost last year were rate exemptions for certain government buildings, waste services levies, and costs of regulatory functions and emergency service contributions.

The Mayor of Forbes Shire Council and president of LGNSW, Phyllis Miller, said cash-strapped councils were “at breaking point”.

“We can’t continue to get these kinds of costs put onto our sector where we have minimal ability to raise our rates,” she said. “The local government sector is not financially sustainable in the present system that we’re working in now. So unless something changes, you’re slowly going to see councils go backwards out the door financially.”

This means councils are asked to pay for more with proportionately less, diverting income away from planned projects or services.

Last year, the state government proposed it stop funding Beachwatch, a water-quality testing service that warns swimmers of where and when it is safe to take a dip after a downpour. For Waverley Council, it meant a $22,190 bill to run the program would need to be footed by ratepayers or be abandoned. The state government has since reversed the decision.

Cost shifting is a key reason many councils have applied for enormous rate rises. Earlier this year, North Sydney and Northern Beaches councils sought to hike rates by 87 per cent and 39 per cent, respectively, garnering much backlash from residents.

Miller also called on the state government to put pressure on the Commonwealth to increase council funding via the financial assistance grant program.

“All levels of government are doing it tough, there’s no two ways about it. But this will hopefully encourage the state government to get behind us.”

The federal government provided $3.3 billion in funding to local governments under the financial assistance grant program in 2024-25.

Ku-ring-gai Mayor Christine Kay described the findings as “depressing”, and said councils were “already buckling under the weight of rate pegging and inflation”.

A spokesperson for Local Government Minister Ron Hoenig said in a statement that councils “are expected to spend within their means and manage their budgets responsibly – as is the expectation of all levels of government”.

“The minister continues to advocate to the Commonwealth for more financial assistance grant funding, particularly for the regional and rural councils that need this funding most.”

Report findings were based on survey responses from 64 out of the 128 councils in NSW, representing 62 per cent of the state’s population.

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