Insights

More is more: Alternative sources of income for rural councils

Posted May 02, 2023

Author(s):

Tom Milverton, Emily Hobbs

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Types:

Local government

Rural local governments are efficient and innovative in generating alternative sources of income. But these supplementary income sources don’t make up for these Councils' lack of structural government funding.

Rural councils grapple with having small populations spread over large geographical areas – making it harder to meet the needs of their community efficiently. Smaller populations mean fewer ratepayers, leaving rural councils hard-strapped to generate substantial levels of their own income.

Councils have a crucial role in supporting rural communities, but they often lack the levels of income required to deliver these basic functions.
— Emily Hobbs, Associate & Partner at SGS Economics and Planning

With this challenge in mind, Rural Councils Victoria engaged SGS Economics and Planning, along with Financial Performance Solutions, to identify possible options for other forms of sustainable income, including drawing from examples of existing alternative income streams deployed by local governments across Australia.

SGS Economics and Planning People in Rural Town

Photo by Paul Harding

SGS identified 21 alternative income options for local governments. The options span a wide range of strategies, from levy reform to commercialisation approaches. We considered these revenue options alongside cost-saving measures, which can also help achieve financial stability.

However, the alternatives are not the issue; the implementation of available options is the obstacle. Many rural councils lack the resources to effectively pursue sustainable income options. And even if they did, the options would not resolve rural councils' broader structural funding challenges. As Tom Milverton, one of the lead authors of the report, comments:

There is no cover-all solution to local government financial security. For true financial security, there must be greater financial support from federal and state governments, and councils should be confident in seeking and advocating for this funding.
— Tom Milverton, Consultant at SGS Economics and Planning

This support, the report suggests, means more funding for the rural councils that need it the most. Councils need more access to national tax revenue. This includes revising critical funding sources such as the minimum general purpose grant allocation.

We know there are no quick fixes. All councils must consider their geographic, economic, and strategic contexts when assessing possible income avenues. Some income options require far more resources than others and might not be realistic for some councils.

Councils are highly efficient in using the minimal resources that they do have to deliver local services. However, federal and state governments need to provide more support to rural councils if they are to have any chance of maintaining this crucial role in building sustainable communities.

Read the full report