Three Hunter councils have been spending up big on staff, with their overall bills for salaries and wages rising well above inflation.
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Meanwhile, thousands of ratepayers across the region continue to be hit hard with rate rises well above any increases in their own wages.
Tuesday is a crucial day for councils: it’s the deadline to lodge submissions to the state government’s Fit for the Future reform program.
But while some councils appear to be fattening up for the future, the financially conservative Baird government is looking to merge councils.
It is also promising to put downward pressure on rates, but some say the reforms will give councils more freedom to increase rates even higher.
As for pay packets and other costs, the reforms aim to better control council expenditure.
Maitland, Cessnock and Lake Macquarie councils’ bills for wages and salaries rose by 28 per cent, 22 per cent and 18 per cent respectively from 2011 to 2014.
By contrast, Newcastle and Port Stephens councils’ bill for wages and salaries rose by 3.8 per cent and 7.8 per cent respectively over the three years.
The United Services Union insisted it was not ordinary council workers who were receiving big pay rises above inflation.
The union’s northern region manager Stephen Hughes said the big rises in salaries could be going to management.
Wages for ordinary workers rarely exceed the rate pegging amount, Mr Hughes said.
Mr Hughes said annual wage rises in the 2014 award were 2.6 per cent, 2.7 per cent and 2.8 per cent.
Maitland, Cessnock and Lake Macquarie councils defended their rising bills. ‘‘The annual increase for salaries and wages applied in 2014, which includes managers, was 2.75 per cent,’’ a Lake Macquarie council statement said.
‘‘Compared to similar councils across NSW, Lake Macquarie council operates comparatively with a lower employee cost per capita and an equivalent or higher level of service.’’
At last week’s state budget, Treasurer Gladys Berejiklian said the government had ‘‘kept expenses under control’’.
Ms Berejiklian said the government was ‘‘living within our means’’ and ‘‘disciplined in wages’ policy’’.
Asked whether the same should be expected from councils, Local Government Minister Paul Toole said: ‘‘Councils must spend every cent of ratepayers’ money carefully, wisely and in line with community expectations’’.
‘‘It’s important that we do everything possible to put downward pressure on rates,’’ Mr Toole said.
Mr Hughes said ‘‘that’s not what they’re saying in Fit for the Future’’.
‘‘They’re saying if councils voluntarily merge, they will lift the cap on rates,’’ Mr Hughes said.
‘‘On top of that, they’re telling councils they’ll receive extra funding and the ability to raise additional rates in a way they can’t now.’’
This is backed by a state-appointed panel’s report, which said ‘‘in most cases rates do need to rise by substantially more than the current annual peg if councils are to achieve long-term sustainability’’.
However, the report said there should be ‘‘greater public scrutiny of councils’ revenue and expenditure decisions and a heightened awareness of the need for, and key elements of, sound financial management’’.
It said the minister must ‘‘retain a reserve power to intervene in cases where the evidence suggests a council is imposing excessive increases and failing to control expenditure’’.
Mr Hughes said NSW was the only state in the country that had rate pegging, which usually limited rate rises to an average of about 3 per cent a year.
‘‘Three issues have to be addressed: cost shifting, lack of funding and rate pegging,’’ he said.
The panel report said cost shifting had been ‘‘overstated relative to other factors’’.
‘‘Local government does have legitimate concerns about rating exemptions and concessions and the way some fees and charges are fixed below cost,’’ it said.
The panel concluded that Lake Macquarie council should merge with Newcastle council, but both councils oppose this.
A close look at the two councils’ finances shows they have been trading places on the financial front in the last few years.
In 2011, Lake Macquarie council recorded that it had 885 full-time equivalent employees, while Newcastle council had 926 such staff.
By 2014, Lake Macquarie had 927 full-time equivalent employees and Newcastle council had 870 such staff.
Lake Macquarie council’s expenditure rose from $170 million in 2011 to $194 million in 2014.
In Newcastle under former lord mayor Jeff McCloy, the council’s spending decreased from $228 million in 2011 to $223 million in 2014.
Revenue from rates and annual charges rose at Lake Macquarie council from $102 million in 2011 to $128 million in 2014.
In July 2012, a massive rate rise began to take effect in Lake Macquarie.
This involved an average rate rise of 55 per cent over seven years, with business rates rising by 71 per cent, on average, over the same period.
From July 1, Newcastle council will increase rates by 46.9 per cent over five years.
Maitland council introduced last year a rate rise of 63.2 per cent over seven years.
The Newcastle Herald reported on Saturday that rates in a merged Maitland-Dungog council would have to rise above this.
Maitland council’s bill for wages and salaries rose from $17 million in 2011 to $21.8 million in 2014.
Cessnock council had not applied for a massive rate rise like other councils, but its wages and salaries’ bill rose from $14.8 million in 2011 to $18.1 million in 2014.
