NSW Cost Shifting: What It Means for Lane Cove

Council would like to inform the community about cost shifting and how it is impacting Council and the community. 

What is cost shifting?

“Cost shifting” happens when the NSW Government requires councils to deliver services or meet obligations but doesn’t provide enough funding. Councils then have to use ratepayer money to cover the gap.

$1.5 billion in costs are shifted onto NSW councils every year.  That’s about $497 per household each year. Over the last decade, the total cost has reached $11.3 billion across NSW.

It directly affects our community in many ways

• Emergency Services Levy (ESL) - Councils must fund 11.7% of the Rural Fire Service, Fire & Rescue NSW and SES. Since 2024–25, this charge has been built into council rates – meaning residents are effectively paying a State tax through local rates.
• Library funding shortfall - The State once committed to funding half the cost of local libraries. Today it contributes only ~6%. Lane Cove Council pays the rest to keep our library vibrant and accessible.
• Waste levy (landfill tax) - Every tonne of waste to landfill costs councils more than $160 in State levies. Only a small portion comes back through grants, leaving households to cover most of the cost through waste charges.
• Pensioner rate rebates - While the State mandates rebates for eligible pensioners, it only partially reimburses councils. Lane Cove covers the shortfall so local pensioners continue to get relief.
• Development and regulation - Fees for assessing development applications, managing companion animals, and environmental enforcement are capped by the State and don’t reflect the true costs.
• Stepping in where services are missing - Councils often pick up gaps in services like youth programs, seniors’ activities, community transport, and flood mitigation.

“State sets rules → Council delivers → Residents pay.”

What this means for you

• Part of your rates goes to cover State Government costs (an “invisible tax”).
• Local projects like new playgrounds, footpaths, or cultural programs have to compete with State-imposed charges.
• Without fair funding, councils face tough choices: reduce services or increase rates (within IPART rules).

What Lane Cove Council is doing

• Advocating through Local Government NSW and directly with MPs for fairer funding.
• Driving efficiency through service reviews, shared services, and smarter procurement.
• Being transparent by reporting cost pressures in our Delivery Program, Operational Plan, and annual Budget.

You can read two Council Meeting reports which explore this issue: Ordinary Council Meeting 21 March 2024|Ordinary Council Meeting 29 July 2025