By Paul Hemsley and Julian Bajkowski

The Shires Association of New South Wales has renewed its attack on cost shifting by the states and Canberra after a survey found that councils were left out of pocket by $499 million in the 2012/11 financial year through cross-jurisdictional financial manoeuvres.

The Local Government and Shires Associations of NSW (LGSA) says its regular survey of 86 councils, held between May and November 2012, has exposed “continual moves by the state and federal governments to palm their responsibilities on to Local Government without the corresponding funding.”

The accusations of short-changing cover a range of functions extend across mandatory contributions to Fire and Rescue NSW, the NSW Rural Fire Service and the NSW State Emergency Service to inadequate funding for libraries and pensioner discounts on rates bills.

“From controlling noxious weeds and managing contaminated land to enforcing the Companion Animals Act NSW (1998) – councils are constantly carrying out activities and regulatory functions for the state and federal governments without sufficient financial resources," president of the Local Government Association of NSW, Cr Keith Rhoades, said.

"This is on top of the financial restrictions placed on the 152 councils across the state, courtesy of the NSW Government's rate pegging system."

The issue of rate pegging and cost shifting is a particularly sore point with councils after Premier Barry O’Farrell last year backflipped on an election promise that forced council mergers would not occur. The justification for the broken promise has been that many councils are financially unsustainable.

However the politically influential property development lobby group Urban Task Force has panned idea of forced mergers, arguing instead for cost savings to be made through shared services projects.

Cr Rhoades took particular issue with the amount of the shortfall and said it was not a surprise that the “cost shifting amount of $499 million is equal to the estimated annual infrastructure renewal gap of $500 million per annum, as found in the Percy Allan Report," into local government.

Shires Association President, Cr Ray Donald, said that the amount that had been cost shifted to local governments in NSW equated “to 5.72 per cent of the total income of Local Government in NSW, before capital amounts.”