The NSW Government is progressing a program of reforms to improve the financial sustainability of local councils.
These reforms respond to the findings of the Parliamentary Inquiry into the ability of local governments to fund infrastructure and services, which identified that many councils are unable to sustainably fund services and infrastructure from their existing revenue base.
The Government has accepted the majority of the Inquiry’s recommendations and is implementing a coordinated program of reform to strengthen councils’ long-term financial position and improve transparency across the sector.
Why reform is needed
Local councils play a critical role in delivering services and infrastructure to their communities.
However, the Inquiry found that:
- many councils face ongoing financial pressures, particularly in regional and rural areas
- existing revenue sources do not always keep pace with increasing costs
- financial information is not always clear or accessible, limiting effective decision-making and community oversight.
The reform program aims to support councils to:
- better align revenue and expenditure
- improve financial transparency and accountability
- ensure services and infrastructure are sustainable over the long term.
Key reform areas
The Government’s response focuses on a series of interrelated reforms.
This workstream will examine and test changes to the rating system to address structural issues, including the treatment of emerging issues such as Build to Rent (BTR) developments and renewable energy. It will draw on IPART’s previous recommendations and targeted consultation to inform policy development.
Key elements include:
- reviewing aspects of the rating system to improve equity and the distribution of the rating burden
- maintaining independent oversight of rate setting through IPART
- developing a new pathway for permanent rate adjustments through a Comprehensive Spending Review.
This workstream will design and establish a formal framework for councils seeking permanent rate increases. It will build on councils’ existing planning and reporting processes, ensuring proposals are grounded in established service delivery and financial planning.
The process will require councils to demonstrate:
- what services and infrastructure they will deliver
- the full cost of delivery
- how these costs are funded
- whether existing expenditure is efficient
- community engagement and capacity to pay.
This workstream will simplify the SV process, focusing on time-limited, clearly defined projects or programs, rather than permanent increases to the rating base. It will also introduce clearer requirements for councils to demonstrate the benefits of proposed funding to their communities.
The reforms will focus on:
- refocusing SV on time-limited projects or programs
- simplifying the process to reduce administrative burden
- improving transparency for communities about the purpose and benefits of proposals.
This workstream will redesign council financial reporting and performance measures to provide a clearer and more timely view of financial performance and improve transparency. This will support stronger accountability by enabling councillors and communities to better understand how councils are managing their finances and delivering services.
The focus will be on:
- streamlining financial reporting requirements
- improving the clarity and usefulness of financial information
- reviewing performance measures and ratios
- increasing transparency through more regular reporting.
This workstream will review statutory fees and charges to ensure they better reflect the cost of delivering services. This includes auditing existing fees to identify those that are outdated and may require updating, where appropriate, including through CPI indexation.
The focus will be on:
- reviewing statutory fees and charges to ensure they reflect current costs
- supporting councils to better consider the use of discretionary fees and charges
- advocating for improvements to grant funding arrangements.
This workstream will review asset depreciation methodologies and alternative valuation approaches, recognising the time and cost for councils to regularly revalue assets, particularly those that are unlikely to be sold, to ensure financial reporting is fit-for-purpose and reflects councils’ financial position.
The focus will be on:
- reviewing asset valuation and depreciation approaches
- ensuring financial reporting better reflects councils’ financial position
- improving decision-making about infrastructure investment and maintenance.
Expert Advisory Panel
The Expert Advisory Panel (EAP) has been established to support delivery of the reform program.
The Panel forms a central part of the Government’s response and provides independent, expert advice to ensure reforms are practical and informed by sector experience.
Role of the EAP
The first meeting of the EAP, held on 12 May 2026, marked an important milestone in progressing the Government’s local government reform agenda. The meeting provided a strong foundation for the Panel’s work, with the Minister for Local Government, the Honourable Ron Hoenig MP, setting the strategic direction and outlining key challenges facing councils.
The EAP will meet regularly to support the delivery of the reform program. Operating in an advisory capacity, it will provide strategic, technical and operational advice to inform both the development and implementation of reforms. This will help ensure reforms are practical and grounded in how councils operate and deliver services.
Work program
The EAP is progressing a work program across several reform streams:
- rating system reform
- council performance measures and reporting
- Comprehensive Spending Review framework
- Special Variation reforms
- asset depreciation and valuation
- statutory fees and charges review.
Membership
The EAP brings together experienced local government leaders from across metropolitan, regional and rural councils, along with sector and workforce representatives, ensuring its advice reflects a broad range of perspectives and operating context.
EAP members include:
- Phyllis Miller OAM, Mayor Forbes Shire Council and former President LGNSW
- Ray Brownlee PSM, General Manager Randwick City Council and former GM Northern Beaches and Auburn City Councils
- Kerry Robinson OAM, CEO Blacktown City Council
- Mark Ferguson, General Manager Eurobodalla Shire Council
- Melissa Boxall, General Manager Temora Shire Council
- Daniel Papps, Manager of Industrial, Rules, Governance, and Compliance, United Services Union, and
- Brett Whitworth PSM, Deputy Secretary, Office of Local Government, who will chair the Panel.
EAP meeting communiques
We will provide regular updates on the work of the EAP and the progress of financial sustainability reforms.