Local governments in country areas could disappear altogether if long-term financial and funding issues aren’t addressed, with decentralisation the answer, one Orange city councillor has warned.

Another Colour City rep argues that regional councils like Orange are being left to carry the can on service and infrastructure delivery for their communities, while receiving an increasingly smaller share of funding; a problem that could lead to a debt bomb for the future.

While draft council budgets are typically a subject that leaves ratepayers’ eyes glazed over, Cr Steve Peterson believes that for Orange, the devil is in the detail…

While the headline figures in the current draft budget look good with a projected $2.6 million consolidated operating surplus for 2026/2027, he said there are commitments running into the millions, that have not been properly factored into the equation.

The problem, he said, ultimately comes down to the long-term reduction of the share that councils like Orange get in government money under the unfortunately-titled Federal Assistance Grants (FAGs) scheme.

Increasing debt loads could even see the end of local government as we know it, long-term councillor, Jeff Whitton added, with more people moving west the key to the long-term future of our third tier of government in the bush.

For the present however, Cr Peterson said that maintenance of what we already have via depreciation and renewal are the ticking financial time bomb threatening our financial viability.

“Orange doesn’t have a short-term crisis, but it has a medium-term issue with depreciation costs of $12.9 million and about a $2 million net surplus — that’s not taking into account infrastructure renewal,” Cr Peterson said.

“You may not credit this, but council has a $2.2 billion asset pool, all that has to be maintained over time, and the question is, will we have the money in the future to do that?” he added.

He said the currently under-construction John Davis OAM Stadium at Bloomfield is a classic example of an asset with a $75 million price tag that council will bear the maintenance cost on, year-in, year-out.

With the recent federal budget showing untied FAGs having dropped from 1 per cent of tax revenue in 1996 to a new low of 0.49 per cent for 2026/2027, councils are being left carrying increasing cost burdens for the community.

“While all the money for stadium is being covered by the State and Federal Governments, it will cost at least $300,000 a year to maintain, and that’s only an initial estimate.

“While we’re now only getting half a per cent of federal money, we carry a lot more than that in facilities and services for the community,” Cr Peterson said.

He said that as well as rate-capping forcing councils to only raise annual charges by around the rate of inflation, other avenues for increasing revenue, are also being stymied under the umbrella of “keeping the cost of developments down”.

“A great example of that, is that the amount that a council can ask a developer to provide in helping fund footpaths and roads and the like for infrastructure, has been frozen for nearly 15 years,” Cr Peterson said.

“Now our costs in providing those services is far greater than it was a decade-and-a-half ago, but we can’t increase the levy on the basis of not adding burdens to the costs of new homes and the like,” he concluded.

Future cost burdens on our third-tier of government could ultimately see the end of regional councils altogether, quarter-century local government veteran Cr Whitton believes.

“Changes in reporting during the amalgamation push of the previous State Government in which depreciation costs and replacement of old sewerage and water systems had to be factored in, found that a lot of country councils, were not viable,” Cr Whitton said.

“If the current trend continues with reduced funding from the State and Federal government, we could end up like New Zealand which has essentially abolished regional councils, and replaced them with things like community advisory boards,” he added.

He said that removing rate-capping, introduced in the late 1970s after some Sydney councils had introduced near 200 per cent rate increases over a three-year period, was not the answer.

“My personal opinion is I support capped rates, it’s a way of saving councils from grand ideas their city can’t afford,” Cr Whitton said.

“Council is not a business, and many of the people elected simply don’t have the financial background in business to make decisions without that constraint,” he said.

He said that while councils are being short-changed with state and federal funding, they will have to adjust to this reality via increasing the ratepayer base.

“Local government will either disappear, or there will be a change in how it’s run; pretty much the answer for regional councils is decentralisation, we have to get people to move out, rather than move up,” Cr Whitton said.

“The real growth is to have people relocate to these areas, that’s the only way to increase income, our lifestyle here is far superior to much of Sydney’s and, with things like artificial intelligence and work-from-home, there’s no reason they shouldn’t move to towns like Orange,” he added.

“The challenge is jobs, but if you fix the train system, people will be leaving Sydney in droves.”