‘The cost of the borrowing will be borne by the new entities, and not just next year but for a decade, and that will leave a nasty taste in the mouths of ratepayers,’ Mr Pickard said after the State Budget announcement last Thursday.
Treasurer Mike Nahan’s first Budget allocated $45 million in loans, with interest subsidised by 2 per cent by the Government and $5 million in grants for three years, to halve Perth’s 30 councils, including the proposed G7 joining all western suburbs councils.
Subsidising the loans is expected to cost $2.2 million in a stressed Budget that targeted voters’ utility costs, transport charges and housing buying fees and not the sale of State assets that were mooted to contribute to reducing WA’s debt expected $27.5 billion in 2016-17.
WALGA estimates council mergers across Perth in 2014-15 will cost $45 million to $50 million. Queensland spent up to $200 million during its changes.
Mr Pickard said the ‘measly’ $5 million each year meant the Government had ‘punished’ and ‘stood up’ councils taking part in its five-year reform process, and Premier Colin Barnett should intervene and find more funds or stop the process.
Mr Pickard said selling public assets could be a merging council’s only choice if it did not want to borrow. He said cash reserves saved for use on a community asset such as a sports pavilion could end up paying for a new council’s computers.
Mr Pickard denied WALGA had not lobbied hard enough for more funds.
‘We’ve been having an extended conversation with the Government and at every juncture they have said they would fund the process,’ he Pickard said.
The Local Government Advisory Board is considering four proposals for the western suburbs, including the G7, a Claremont-suggested G4 of the town and its three southern neighbours, a G2 with a council centred on Subiaco and Claremont and a G5 that adds Nedlands to the G4.
‘The $15 million allocated over the next three years might, just might, pay one council’s costs,’ Nedlands mayor Max Hipkins said.
Local Government Minister Tony Simpson would not comment on loan repayments and asset sales before briefing councils on the budget yesterday.