RATEPAYERS were footing the bill for the government cost-shifting on to local councils.
The Legislative Council Economy and Infrastructure Committee has called for adequate funding of councils by the State Government.
In its report the committee has also called for an investigation by the Auditor-General on the financial impacts of cost shifting by state and federal governments.
Committee members said the roles and core responsibilities of local government in Victoria lack clear definition and disproportionately impacted rural and regional councils.
The landmark report, which the State Government has six months to respond to the more than 90 findings and recommendations, said the cost of infrastructure and service delivery have risen at a pace that outstrips the growth in grant funding.
“The renewal and upgrade of roads and bridges are a significant cost pressure, particularly for large and small shire councils due to their geographic size and comparatively small rate base, the report found.
“Grants programs, including Federal Assistance Grants, have regard for these issues when awarding funding. However, it remains a threat to the ongoing financial sustainability of rural and regional councils.
Committee chair and Northern Victoria Region MP Georgie Purcell said: “At the same time as meeting the needs of local communities, local government is extremely limited in its ability to raise revenue and thereby pay for the services that it is expected to provide.
“During this Inquiry, the Committee heard from a significant number of local government representatives about the challenges that they are facing in meeting the demands of the community today and in remaining sustainable into the future. 
“The committee heard about the tensions between the financial challenges faced by local government councils and the capacity of ratepayers to meet the financial demands made on them. It also heard from councils about cost shifting from the other levels of government onto local government, and the financial strain that this places on councils.” According to Gaelle Broad, the Nationals MP in Northern Victoria Region, the Government’s systematic shifting of state responsibilities onto councils has been exposed in a Parliamentary inquiry and regional communities are paying the price,
Ms Broad was a member of the committee that conducted the inquiry and heard from councils right around the state.
 She said a range of key issues were not properly addressed in the Inquiry into Local Government Funding and Services report.
The Nationals and Liberals produced a minority report which highlighted these concerns:
Renewable energy facilities rate contributions: Under the Payments in Lieu of Rates scheme, renewable energy facilities bypass paying their fair share, forcing regional communities to cover the shortfall.
Fire Services Levy contributions: While renewable energy facilities increase fire risks, they pay subsidised rates, leaving farmers and regional families - many of who volunteer with the CFA - to pay disproportionate costs.
Infrastructure delays in growing suburbs: The Government has slashed funding for the Growing Suburbs Fund from $50 million to a paltry $5 million, crippling councils’ ability to deliver essential infrastructure on the city fringes.
Cultural heritage processes delaying and blocking developments: Unregulated and expensive cultural heritage assessments are stalling crucial projects, costing council and communities millions.
“The Nationals and Liberals broadly support the majority report’s findings and recommendations, but we are alarmed at these major issues which have been exposed,” Ms Broad said.
“Labor’s cuts, incompetence, and cost-shifting have left councils with no choice but to cut or reduce many essential services.
“In regional areas, this is compounding the struggle many people are having with daily cost of living pressures.
“The report has exposed the Allan Labor Government’s financial incompetence.”