DYKE, Mr Joshua, Executive Officer, North West Queensland Regional Organisation of Councils FEGAN, Mrs Janene, Deputy Chair, North West Queensland Regional Organisation of Councils PEDDLE, Ms Kate, General Member, North West Queensland Regional Organisation of Councils SEWTER, Mr Richard, General Member, North West Queensland Regional Organisation of Councils [14:20] CHAIR: Welcome. Do you have any comments to make on the capacity in which you appear? Ms Peddle : I'm the mayor of the Flinders shire. Mr Sewter : I'm the mayor of Mornington Island. Mrs Fegan : I'm the mayor of McKinlay shire. CHAIR: Thank you. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard, attracts parliamentary privilege and is being broadcast live. I now invite you to make a brief opening statement before we proceed to discussion. Mrs Fegan : I'm going to lead that. Thank you for the opportunity to appear today on behalf of the North West Queensland Regional Organisation of Councils and supporting the broader Western Queensland Alliance of Councils submission to the parliamentary inquiry into local government funding and fiscal sustainability. The North West Queensland ROC represents 12 remote and regional local governments, nine of which are financially unsustainable, including three Aboriginal shire councils that collectively service some of the most strategically important and very structurally disadvantaged communities in Australia. Across North Queensland, our member councils span approximately 22 per cent of the state's land mass and support key industries that are critical to both the national and state economy, including mining, agriculture, freight and emerging energy sectors. Our region collectively contributes $142,000 per capita to the national economy, as compared to $91,000 elsewhere in Queensland, and it delivers $4.72 billion of gross regional product annually. Incremental adjustments will not resolve the situation. What is required is structural reform to how local government is funded across Australia—not just a cookie cutter or generic reform but reform that fundamentally shifts the way the rural and remote councils are supported financially. As outlined in the Western Queensland Alliance of Councils submission, the North West Queensland ROC supports the shift to more sustainable place-based funding models in particular; a preference for untied, allocated funding models, such as financial assistance grants; reduced reliance on competitive grant processes; greater funding certainty through the multi-year allocations; and the removal of co-contribution requirements that disadvantage rural and remote councils. Importantly, we also propose a new approach to delivering infrastructure in regions like ours—one that improves the coordination of federal and state government funding programs and breaks down the silos between government departments. Through our briefing to government, the North West Queensland ROC has outlined the concept of a north-west investment partnership, a coordinated cross-jurisdictional model bringing together federal, state and local governments to jointly plan and deliver enabling infrastructure and service for north-west Queensland. This model recognises that the scale and complexity of regional infrastructure challenges cannot be addressed by one level of government, nor through fragmented program-by-program funding programs. The North West Queensland ROC advocates for a contemporary framework of package funding approaches that integrate multiple programs across portfolios and for embedding disaster resilience into infrastructure investment, rather than relying solely on post-disaster recovery funding. The core issue before this inquiry is not whether local government funding is under pressure; we know it is. The issue is whether the funding framework is fit for purpose in sustaining local government and regional and remote Australia. From the perspective of north-west Queensland, it is not. Without meaningful reform, councils across north-west Queensland and more broadly will face declining capacity to maintain critical infrastructure, deliver essential services and support the economic productivity on which our local communities and nations depend. This inquiry presents an opportunity not just to acknowledge these challenges by the federal government but to implement the structural changes required to deliver long-term financial sustainability to the nation's local governments. The North West Queensland ROC stands ready to work with all levels of government to design and deliver these reforms. We welcome your questions. CHAIR: Thank you very much. I note your submission to the previous inquiry argues that financial sustainability should be measured through a broader framework that includes service delivery, governance and economic outcomes, rather than financial metrics alone. What does that tell us about the limitations of viewing local government sustainability simply through the lens of Commonwealth funding levels? Ms Peddle : If I just simplify it: for us, our attempts in our regions are to get financial sustainability. That's the name of the game; that's the goal. In a lot of what we do—and I've noticed a shift in the last 10 years—we would love the luxury of just focusing on roads, rates and rubbish, but, unfortunately, we've got to a point, for various different reasons, where we're subsidising every single one of those services and we're not meeting the costs. In particular, our council have gone through cutting the FAG exercises, trying to figure out: 'Is it our operations? What can we do to tighten our belt?' and understanding all the challenges around us to deliver those services at least at cost. The point I will make is we are trying to find ways to get external source revenue that makes us less dependent on government. Unfortunately, in order to get there, the reality is we're going to need a hand from both levels of government. A lot of the funding we talk about in terms of the competitive funding, and the process that we need to go through and the challenges that we have in terms of internal resources and being able to gather the information that's required these days to get to a point where we are shovel-ready—everyone loves that word—in terms of grant preparedness to be successful, are really challenging for councils of our size. I don't want to talk too much to what the issues are, but, in terms of trying to reach sustainability, the creativeness we have within our shires to try and get appropriate funding that builds the building blocks of industry, whether that's power lines or bigger infrastructure investment that enables the private sector to come in, which enables us to be creative in the way that we will gain more revenue, more rates, increase our population and work from there—my biggest fear in my council is that we have an opportunity at the moment with the CopperString projects; there is a transmission line coming through, funded by the state. That creates an opportunity for those industries that I'm talking about to start to thrive and grow, because they have that enabling infrastructure there to create industries, which then create wealth, which then create sustainability for us in some regard. With things like that, for me, I think it's important for the federal government—instead of getting through this period where it feels like we've got our hand out and we're always coming to you asking to be propped up, how can we better spend that money in funding models and packages that the government is talking about, in terms of integration with all three levels of government, that frontloads this kind of investment, enables us to get back on our feet and has the building blocks there for us to go out and chase that sustainability ourselves? I don't want to speak for all the mayors here, but I'm sure they don't want to keep coming back with their hands out every single year saying, 'We need more.' We need the support on the ground of real infrastructure that creates wealth and jobs, and we can come in the back end and do what we need to do for our communities. Mrs Fegan : Can I add to that, on a smaller scale. At Julia Creek, in McKinlay shire, we run the caravan park and a lot of things. Ten years ago, it cost us money. We had some funding to do upgrades to make it sustainable. We now make money on it. Given the opportunity, we are sustainable. But we have 42,000 square kilometres of roads, and that's a lot of roads to be looking after—a lot of assets. When you have a rate base that's four per cent of your revenue, that's not going to pay for it. Unfortunately, we are heavily reliant on the funding. As Kate explained, we have got a lot of industry interested in coming to our community, but the first questions are: 'Do you have a doctor? Do you have a high school?'—we don't have a high school—'Do you have a kindergarten?' Those are all basic services that people require. Ms Peddle : With the roads, it's just a vicious cycle. I heard the mayor of Mackay speaking before and talking about how our regional councils rely on that roads funding coming in; we absolutely do. But you're almost hoping that you get a good season of rain, enough to damage your roads, because that means the money's coming in so that you've got work for your workforce—so employment retention but also money coming into your coffers to keep ticking over. But, in reality, if you were operating a business that way, it's not efficient. We should be building them to a standard where they're going to last a significant amount of time, rather than getting into this forced habit. I don't blame any of us for having to go down that path because that's the path that's put in front of us, and we're trying to maximise that to the best opportunity we can for our roads, the revenue and our workforce. That growth opportunity we speak about is a fear of all of us—that we can't capitalise on it. I spoke about CopperString. In the area we're particularly in, in the corridor now—and I know that's different to Mornington Island—you're finally starting to see some investment in that foundational stuff. Those industries will come. The renewable energy sector is quite new, so there's an opportunity for us to garner that. We're very different out there in terms of how we look at it. It's not an ideological debate to us; it's very much a survival thing: 'This is development. This is good for the country. We need energy generation. How do we capitalise on this?' They will become our largest ratepayers in my particular shire, but they'll also come, now, with the state legislation to help us fix the roads and go through community benefit agreements. They're going to uplift our communities. We will miss out on some of that if we can't land it, because—and you're seeing it now—people are interested to decentralise and come to our regions, but we don't yet have the houses and the infrastructure to take them on—so it's a double-edged sword. CHAIR: Thank you. Deputy Chair. Ms PENFOLD: Do you think the system is broken? We've had a lot of conversation about trying to fix the financial assistance grants, which is the main vehicle. Is it fixable, and what would be the alternative? Mr Dyke : We're not debating this; we believe the system is broken, particularly for rural and remote councils where we are seeing increasing expectations on service delivery that sits outside the formal role of local governments. In our submission, similarly, we call for an increase in the funding pool or a change in regard to the minimum grants, with councils that are more sustainable shifting those funds to councils that aren't sustainable, to support them in delivery. We've also been working on a regional infrastructure partnership, which is detailed in our submission, around state and federal governments working together with the regions and providing allocated funding to plan multiyear planning, becoming more strategic about how we are delivering infrastructure and services within region. At the moment we have a siloed approach to investment in the regions, where each department has priorities that it's aiming to deliver upon; however, they don't talk to other departments around how they can maximise investment into the region. There is an opportunity there to improve our coordination by state, federal and local governments working together around coordinating where investment occurs in region and maximising the outcomes achieved from that investment. Ms PENFOLD: But the problem is far more acute. I'm sorry, I don't mean to sound like I'm having a go at what you're saying, but, to me, it seems like the problem is acute. Roads are falling apart. Bridges are falling apart. The community amenities are at the end of life. You've got a significant proportion of ownership of the nation's assets with such a small pool to fund it. There's such an imbalance in the system. How does that imbalance really get addressed? This committee is about financial sustainability. You can do regional deals, but you're still very beholden to state and federal governments coming to the table. I am really throwing a blank sheet of paper here right in the middle of us. What does it look like? Or have we just got to try and work with what we've got? Mr Dyke : I think it's a bit of both. As Mayor Peddle has spoken about, industry for north-west Queensland is very much the future for the region. Trying to attract that investment and the social licence to operate can provide part of the component. But very much there needs to be more money somewhere. Where does that come from? That's the question. Mrs Fegan : I'll just add that the agricultural industry has always been quite strong. It continues to be with investments from farmers coming from New South Wales because they think the land is cheap. So they're developing and we're seeing a bit more of an interest. We're excited that people want to come and start an industry. But you still need those foundations and— Ms PENFOLD: We need to keep our live export industry. As the former CEO of the industry I'll put that on the table. Do you seek constitutional recognition of local government as a partner in helping achieve financial sustainability? Ms Peddle : I probably have to understand what the mechanisms of that mean. Does that mean in the Constitution we're recognised? Ms PENFOLD: Yes. You're not recognised currently. Federally— Ms Peddle : I feel like we feel that. Ms PENFOLD: It's not esoteric. Through history there have been two attempts at referendums that have both failed. There's a current commitment that hasn't been pursued, largely because there hasn't been bipartisanship. That's been a large factor. Ms Peddle : Speaking for myself, we're the third tier of government and we're very community focused. When it comes to the politics and the Constitution and talking about recognition in that regard, we're probably not so focused on that as we are on the day to day on the ground. Obviously, we're in very different positions to you guys because we've got really small communities. We know most of our community members. We know all of our roads. So there's less overarching dictating from us in terms of what we expect in policy. We're looking more at the tangible outcomes that come into the council. Ms PENFOLD: You've got no backup. The state government can wipe you out with the stroke of a pen in parliament. Ms Peddle : Facebook says local governments don't exist. Ms PENFOLD: Local government is an act of state parliaments. That's why the question exists. If we're going to talk about financial sustainability, does the absence of federal recognition in the Constitution risk states acting in a way that doesn't suit your purposes? I'm just putting it out there. Ms Peddle : I can only see it as an empowerment tool, really, because if that was in there we'd probably be more forceful in terms of our relationship with— Mrs Fegan : Funding could go directly to us, which would be wonderful. Ms PENFOLD: It would overcome those constitutional issues about directly funding local government. That's why there are grant commissions. There have been two high court cases that have questioned even Roads to Recovery funding and the mechanisms because you're not recognised in the Constitution. Ms Peddle : I think it's really exciting. Our whole region is so lucky because, like you said before, it's a blank canvas. We really are a blank canvas. If you look at the opportunities that are available in North Queensland, they're relatively untouched. That's why we keep talking about that investment. We as a nation have got a real opportunity to extract the critical minerals and all of the other incredible things that we have in North Queensland that really are relatively untapped. Even the Murray-Darling, they were using 30 per cent of the water, and we know how that turned out. The allocation that we have in just the Flinders at the moment is less than two per cent. If we went to 10 per cent, imagine what the agricultural sector would look like out there. So I certainly think there are very easy things that could be done. Obviously, we don't have the financial capacity to do it ourselves. We'd need a partnership with government to attract the private investment to kick it off. I think it would be like Texas in America. It would be boom town. Mr Sewter : I'll talk about sustainability, but, when you come from an Aboriginal community that's solely reliant on government funding, this—we've got no industry. We're dealing with native title, and, for development, that's one of the hardest things for a council to do. We can't even build a social house for somebody without native title—going through that process. With the federal assistance grants, what that means for us is $6 million a year lost for a place with no industry. We don't only look after roads, wastewater and all that. We're involved in health. We're involved in education. We're involved in culture. People up there, now, are—we're highly governed by the state government's legislation. 'You can't do this; you can't do that.' When we talk about sustainability, people are buying an average of 1,650 cartons of beer a month. We've got a daily limit of one carton per person per day. We could tap into that if local council was allowed to hold a full pub licence. That's a lot of money a month coming in. If we were to give it out to an individual licensee, then the money's missing forever from that community. This is why we're highly reliant on grants and funding from both governments. Otherwise, we can't operate. Ms PENFOLD: I think that's a good point. CHAIR: Thank you. Ms Jordan-Baird. Ms JORDAN-BAIRD: Thank you all for appearing today. It's great to have you as part of this discussion. I asked a previous witness a question earlier today about regional collaboration which I want to ask you. In your view, are there any shared service opportunities that exist across north-western councils; would regional collaboration reduce costs in things like procurement, engineering, asset management, grant writing and that kind of thing; and do you think this would be beneficial in our remote communities? Mayor Sewter, I had a look at your local government area. It looks very remote. Do you think shared services potentially using the same platform as another council would be beneficial to your community? Mr Sewter : Yes, as long as it was shared equally across the board. Some councils will use it more, and other councils will miss out. That's the way I see it. Ms Peddle : We're doing that a lot now, though. Mrs Fegan : Through the ROC. Ms Peddle : Yes. Ms JORDAN-BAIRD: That's great. Mr Dyke : That is something that we are investigating currently, in particular, around regulatory requirements—so for environmental health officers to do food licences, as well as legacy waste removal and things like that. It is something that we are definitely considering at the moment. We've recently done child-safe training to meet the new Child Safe Organisations Act. It's something we're ticking along with, and there are definitely cost efficiencies that can be achieved through that model. Mrs Fegan : Biosecurity is another one, too— Ms Peddle : And the consultants and the planning. I think we do well with our sharing of information as well, rather than replicating the same stuff that's got the data of a region that's understood. Mrs Fegan : Especially with our roads. CHAIR: Thank you. Mr Burnell. Mr BURNELL: Thank you all for providing evidence today. I want to take a step back. I'm not sure if I got this in your opening statement. Of your member councils, how many are currently financially viable? Mrs Fegan : We have 12 in our—nine are not, so three. Mr BURNELL: Nine are not financially viable? Mrs Fegan : Sustainable—without government support. Mr BURNELL: So nine of the 12 are not sustainable without support? Mrs Fegan : Yes. Ms Peddle : I can speak for Flinders. Fifteen per cent of our total revenue comes from rates, and, because of those aged services that you were talking about before and the need to upgrade them, you want to provide reliable services to your community and that's quite challenging without grant assistance. We can't rate our way out of it, and the last thing we want to do is push people out of town by completely increasing the rates. For instance, for me to fully cost recover our services, I'd need to increase rates by 25 per cent for a residential home. Mrs Fegan : McKinlay Shire is about four per cent and very similar to Flinders but smaller. Mr BURNELL: I want to tack onto the question by Ms Jordan-Baird before. Is there any collaboration going on between any of the member councils around cost-share arrangements? Ms Peddle : Our CEO was just talking about that the fact, at the moment, we are sharing an environmental health officer between the councils that wanted to participate—was that six or seven, Josh? I can speak for Flinders. We were spending upwards of $20,000 a year for that position part time to travel because we couldn't hold them locally, and now it's about $7,000 or $8,000 because of that collaboration. So we're certainly very active, and Josh is in the executive on the north-west ROC to see what we can share. We spoke a lot about IT and procurement and other areas as well. So we're certainly trying everything we can. Mrs Fegan : Waste management is another one we're really working on. Ms Peddle : We even spoken about trying to buy a tyre shredder that we could share, but it was a bit cost prohibitive to keep moving it around a very large area, obviously, of Queensland. Mr BURNELL: I appreciate that the tyranny of distance is a huge barrier to participation in some of those endeavours. I would like to get your thoughts on what information councils should provide to demonstrate that additional Commonwealth funding would be directed to the highest priority assets and not simply expand future maintenance liabilities. Mr Dyke : I suppose it's a consideration. For north-west Queensland councils, a lot of government funding is around capital investment—capital infrastructure. Within north-west Queensland, we're coming to what is termed the infrastructure cliff. We have a considerable number of assets, particularly water and waste infrastructure, that were built post World War II. That's coming to the end of life. With all the grant funding programs that are specifically tailored towards building more capital, it adds future difficulties around the financial sustainability for us to manage that. It becomes part of our asset portfolio, and we have to find money to manage that, whether it's through depreciation or through ongoing maintenance. North-west Queensland councils have been strongly advocating for additional funds to support maintenance of existing infrastructure, and, in doing so, you can obviously renew the infrastructure and build additional capacity within that infrastructure to support additional activities, whether it's more housing or more transport, like freight transport. I think that's a consideration that needs to be made, and we have put in our submission that the focus on capital grants, whilst excellent, does put financial disadvantage to our members, and there are opportunities to expand funding to allow us to manage the existing infrastructure that we currently have, rather than increasing our asset portfolio. Ms Peddle : I think that's probably our view as well because we are fiscally strained so much. I'd like to commend us all on how far we can stretch a dollar, and I think that's probably why we have these collaborative discussions. If there were front loaded funds as a region that you could sit on as a committee with the other two levels of government, I feel like that would be a really responsible way for us, on a micro level, to figure out exactly what we're doing and how we're spending that money rather than just applying for grants with a lot of contingency that probably doesn't need to be there. And I imagine across the federal government that contingency level adds up to billions of dollars that probably don't need to be allocated if we were working at a really micro level together to be able to deliver that—assuming no-one else disagrees with that. With the assets, at the moment one of the town water bores that we drink from is 120 years old, but it's going to cost me over $1 million and I've got a capital works budget of $10 million a year. So you have to be very careful and meticulous about where you're spending the money each year to address the problems that are potentially going to be on your doorstep very quickly. Mrs Fegan : Another example is we have a bore in Kynuna, which is a town of 10 people. That's failing, and that's a $1.2 million investment. What do you do? Ms Peddle : And without government, there's no rainy-day fund, is there? It's not like your own budget. You don't have a rainy-day fund when you need a new tire. Mrs Fegan : We have got a little one. We're pretty good, we're very conservative, and I think we go all right for a little town, but the risk, like Kate said before, especially in disasters—we kind of want a good wet season, because that gets our roads done. If we have five or 10 years of drought then council still has to maintain those roads, but we don't have that external funding coming in, so it gets a bit tight then. Ms Peddle : That in itself is a problem. I'm being very honest, because I don't want to lose that money, which is a whole other conversation, right? It has created a system where everyone is trying to work in the system and make the dollar go as far as it can, and Janene is right; we hope for a wet season so that we get a bit of damage on the road, because that is our only income. Mr BURNELL: As a percentage of your revenue, what does the financial assistance grant make up for the member councils? Ms Peddle : Ours is potentially a little bit higher. I'm sitting at around $10 million. Mr BURNELL: And as a percentage of your revenue, what does that equate to, roughly? Ms Peddle : Good question. I'll see if I can work that out. Mrs Fegan : We're not quite at 10. Mr Dyke : In our first submission, we said nearly 50 per cent of our total revenue comes from external grant funding sources. That was in 2022-23. For the rest of Queensland the average is about 11.4 per cent, so as you can see we are heavily reliant on external grant opportunities. Mr BURNELL: I'm mindful that the financial assistance grant has been touted across the country as the silver bullet that's going to fix all problems. I'm not sure I'd agree with that generalised statement if the methodology stays the same, particularly when you start to look at the regional and remote councils that have significantly less revenue or earning capacity than other, larger councils. I'm keen to get an understanding of what your revenue makeup is. I think it creates a very important picture of how fundamentally important the FAG is for your councils compared to a council where it makes up three or four per cent of their total revenue. Mr Dyke : We can take that question on notice and provide it afterwards. Recommendation 2 in our most recent submission to this inquiry is a request to revisit the minimum grant settings, to look at those councils that are more financially sustainable, look at the minimum grant allowance that they get and redistribute it to the rural and remote councils. Mr BURNELL: The other thing is I know you have some comments there around cost-shifting, but can you identify the top 3 cost shifts that have occurred for your respective councils and whether they reside under the state or federal government? Mr Dyke : It varies across all councils. One from the federal government is airport operations. Within North West Queensland it costs between $50,000 and $200,000 a year just in operational expenses for an airport, and for capital expenses we're talking about millions of dollars each year. Each council has different— Mrs Fegan : We now have to take on the ground staff work as well, because we can't get anyone to take on the contract for the ground staff. Council's resources are now being stretched to maintain that. Health—I know that's a state thing, but we do have PHN providing funding. There are a lot of organisations that PHN funds that we don't see. It would be good if that money could be targeted to what is actually really needed and used in communities. I'll give you an example—someone will come through and drop off a water bottle and a pen and then tick the box that they've been through and been to our community. It's pretty sad Our council provides a doctor's house. We have a community nurse, and we contribute 50 per cent to that community nurse. Child care—yes. Mr BURNELL: What about the waste levy? Mr Dyke : Only one council in our membership has a waste levy, that being Mount Isa City Council. For the other 11 councils, that's not applicable. Mr BURNELL: Thank you very much. Ms Peddle : I think it's worth mentioning that all of the services that each of our communities provide that Janene was referencing there are outside of what typical council operations would be. As to that question, I know it's not directly to the federal government, but we run aged-care facilities; we have an aged-care department. We have ownership of our caravan parks, to provide tourism and accommodation solutions. Similarly, we support normal health within the community, with the doctors. And we were actually paying a teacher's wage, at one point, to keep someone in the town. So I think there's a lot that isn't maybe directly to your question about what the impacts were, but they're all by-products, potentially, of regulation that's coming down with no support, because, in aged-care, obviously, they'll have regulation changes, as they should, but, for a community like ours that doesn't have a service provider, where you have to step into that—and that's the same, or very similar, for community housing as well—you then need staff to operate that. It's really difficult to get the staff with that skill level to our area. So that also threatens your ability, even as a council taking that on, to deliver the service. It's just a knock-on effect. Say you could have enough money to pay that staff member to get the attraction to move to a western area, you'd then have to have a house. That is really challenging for us at the moment. We can't attract anyone to build the houses unless it's at a larger scale. We've got plenty of land. We do have solutions in front of us. But we always fall over, because the challenges and the brick walls that we hit always seem to surmount the positives that we have. So, for me, it's probably the burden of what feels at times like overregulation—done with good intentions, but perhaps not thinking about what that actually looks like inside a council office in a community that doesn't have any service providers and where your community turns to you for everything. I don't think there's really much separation in our communities between state, federal and local, because they're constantly looking to us for everything. And, as you know, we don't have all the answers. CHAIR: Thank you very much for your attendance here today. I do just want to point out, because it's been mentioned a lot, that an increase to one per cent of Commonwealth tax revenue for financial assistance grants is actually equal to an extra $2.3 billion per year—a 71 per cent increase. I just wanted to put that out there as well. But we really want to thank you for particularly providing a remote perspective as well; I think that's really valuable for the committee. So thank you for your attendance here today. If you have been asked to provide any additional information, would you please forward it to the secretariat by 3 July 2026. You will be sent a copy of the transcript of your evidence and will have an opportunity to request corrections to transcription errors. Proceedings suspended from 14:58 to 15:10 .