22 October 2007The NSW Urban Taskforce today revealed that local council infrastructure is in crisis with a $7.7 billion infrastructure black-hole.
“Our worst fears have been realised,” said Aaron Gadiel the Taskforce’s Chief Executive.
The scale of the problem was detailed in today’s report: The Financial Sustainability of NSW Councils, by Fiscal Star. The report details key financial statistics for 91 councils, representing 95 per cent of the State’s population, for the 2005/2006 financial year.
Mr Gadiel said that an extra $7,703 million had to be spent to bring council’s existing infrastructure up to a satisfactory standard.
“This accounts for a whopping 15 per cent of the infrastructure’s total replacement cost,” Mr Gadiel said.
“This is a shocking statistic – revealing that local roads, bridges, footpaths, kerbs and gutters, buildings and drainage infrastructure are simply not up to scratch.
Last year the former head of NSW Treasury, Percy Allan, conducted an inquiry into the financial sustainability of local government. The inquiry rated a council as financially sustainable if its infrastructure backlog was less than 10 per cent of the infrastructure’s replacement cost.
“In inner metropolitan Sydney, the backlog is $590 million,” Mr Gadiel said.
“But this pales in comparison to outer metropolitan Sydney, where the backlog totals $2 billion and accounts for 14 per cent of the infrastructure’s replacement cost.
“In the urban areas along coastal NSW the backlog adds up to a massive $3.1 billion – 27 per cent of the infrastructure’s replacement cost. “The situation is spiralling out of control – no wonder councils have been trying to gouge home buyers with over-the-top levies on new homes.
For example, Parramatta Council is levying new home buyers to pay for the up-keep of its cemeteries.
“New home buyers aren’t responsible for this infrastructure crisis and shouldn’t be made to pay for it.
“The solution is simple.
“Councils would find it easier to maintain their assets if they had a larger population.
“Instead of opposing population growth, anti-development councils should realise that encouraging growth will increase their rate revenue and help solve their financial problems.
“Councils should also consider amalgamating with, or at least combining their administrations with neighbouring councils.
“We all want safe, well maintained roads, public buildings, bridges and footpaths. We’re not going to get this if councils don’t change their ways,” Mr Gadiel said.
The NSW Urban Taskforce is a property development industry group, representing NSW’s most prominent and important developers, builders and property financiers. The NSW development industry’s annual turnover is $35 billion and employs 180,000 people, accounting for six percent of the State’s total employment. It is the fifth largest contributor to the State economy.
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