Mining lobby wants state to merge regional councils as rate fight heats up

The state’s resources sector is on a collision course with regional councils, with the Chamber of Minerals and Energy urging the state government to merge shires to address financial and governance woes.

In its pre-budget submission to the WA government, released Thursday, the chamber raised concerns about regional local governments using resource companies as cash cows to prop up their ailing budgets.

Acting chief executive Brook Fowles suggested the dire state of their budgets reflected broader issues at the councils – including financial mismanagement.

“There is growing concern that some regional local government areas are looking to alleviate budget deficits by levying disproportionate rates and charges on resources companies,” she said.

“These deficits are driven by growing residential expectations for services, insufficient funding and in some cases financial mismanagement.”

Fowles said her member companies were also being asked more often to shoulder the costs of things like housing, health care and education in councils, which she said amounted to “cost-shifting from the public sector to the private sector”.

“This growing dependence on private sector contributions indicates serious financial sustainability concerns for WA’s [local governments],” she said.

“These financial issues can cause additional problems such as difficulties attracting and retaining skilled staff, especially when coupled with remoteness and liveability issues. This leaves [local governments] vulnerable to systemic failures of governance, further eroding regional [local government] efficiency and impacting essential service delivery to communities.”

Fowles recommended the state consider “boundary adjustments” to remove duplication of staff, service delivery mechanisms and infrastructure and improve the talent pool for councillors and elected staff.

The former Barnett Government attempted local government amalgamations in Perth last decade but was forced to abandon them in 2015 after public backlash. They did not attempt to amalgamate the state’s 107 non-metropolitan councils.

Local government rates were thrust to the spotlight earlier this year after the Shire of Mount Magnet won a Supreme Court bid to levy rates on land used by vanadium miner Atlantic under a ‘miscellaneous licence’.

The industry warned that the decision was against the intent of local government laws and opened the door to local governments drawing a further $55 million worth of extra rates from the resources sector across the state.

It also prompted the WA government to step in and introduce amendments to the Local Government Act 1995 to parliament on October 23, which would prevent councils from rating land held under a miscellaneous licence.

The WA Local Government Association lashed the state government for intervening in the miscellaneous rates issue.

“Our hospitals across Western Australia are at breaking point, WA families have never been more impacted by the cost of living and housing affordability in WA is beyond the reach of many, yet the state government’s priority is to legislate to keep the mining sector happy,” WALGA President Karen Chappel said earlier this month.

“WALGA considers the proposed amendments to be unnecessarily punitive and disproportionate in their impact on local governments that have lawfully levied rates on occupied land under miscellaneous licences.

“The state government’s disregard for WA local governments forces the sector to do more with less, while the introduction of this legislation undermines the fabric of our judicial system and the Supreme Court of WA.”

AUKUS concerns

Fowles’ submission also raised concerns that the advent of AUKUS work in Henderson may push the resources sector out of the important Australian Marine Complex industrial precinct and the common user facility it hosts.

The common user facility provides access to engineering and fabrication facilities for ship maintenance and building, and is used by hundreds of different businesses.

It will become increasingly important for the burgeoning defence sector as AUKUS progresses and nuclear submarine maintenance ramps up in the state over the next decade.

Fowles warned that the precinct was important to facilitate construction activities in the Kwinana industrial area, which is heavily linked to resource projects.

“Any reduction in access to this facility to enable defence activities will require the replication of common user facilities capabilities elsewhere in the state to support resources sector activities,” she said.

“Without the continuation of these capabilities for private industry there is a real risk that non-defence activities will be crowded out, adversely impacting the state’s local manufacturing capacities which have been built up over decades.”

Power prices doubled

Fowles has also urged the WA government to act on increases in industrial power prices for companies on the South West electricity grid.

The chamber calculated that power costs have doubled in the past five years from $125 per megawatt hour to between $210 and $250 per megawatt hour.

“These sharp increases in wholesale costs significantly reduce the viability of new electricity-intensive resources and manufacturing projects in SWIS-connected regions. They may also delay or undermine investment decisions that support the decarbonisation of existing industry via electrification,” she said.