DEBT at the five Lower Hunter councils has soared by 50per cent in the past five years to a combined $160million.
Nanjing Night Net

The debt has mounted while councils struggle to contain costs, amid concerns about ageing infrastructure and ratepayer frustration at councils wasting their money.

As well as increasing debt, Newcastle, Lake Macquarie, Maitland, Cessnock and Port Stephens councils have raised rates or plan to raise rates above the cost of living.

Public concern about excessive debt has increased since the global financial crisis but in the local government sector, some experts believe more debt is needed.

Economists and academics said at recent local government inquiries that councils had not been borrowing enough money.

In some instances, they concluded, a lack of borrowing had partly been the cause of large infrastructure backlogs.

The infrastructure backlog, amounting to $300million among the five Lower Hunter councils, was still the ‘‘number one problem in local government’’, University of New England Economics Professor Brian Dollery said.

Lake Macquarie council corporate services director Wayne Jack said the council should ‘‘only be concerned about the assets which are important for the community’s needs’’.

He said Lake Macquarie council had a $67million backlog, but it was consulting the community about what standard of infrastructure it needed.

Centre for Local Government director Professor Brian Dollery said the state government was setting increasingly high standards for replacing and building infrastructure.

But many in the council sector believe the state government has failed to provide enough money to match its high standards.

Lake Macquarie City Council is planning to massively increase borrowing to boost income.

Professor Dollery said it was fine for councils to borrow money if it was done to spread infrastructure costs across present and future generations.

‘‘You want to make sure borrowing is just to meet long-term infrastructure costs, not short-term expenditure shortfalls,’’ he said.

Mayor Greg Piper said the council had the capacity for increased borrowing but had to be prudent with ratepayers’ money.

‘‘It’s not an issue of how much debt you have, but whether or not you can service the debt,’’ Cr Piper said.

The state agency responsible for councils, the NSW Division of Local Government, said all five Lower Hunter councils had satisfactory ‘‘debt service ratios’’, which means their ability to repay debt.

Port Stephens Council had the highest debt ratio of the five councils but paid $11.5million off its $50million debt in the past year.

Local government experts, through various inquiries, have suggested councils also consider abandoning some responsibilities, revising obligations, resetting standards, reordering priorities and pursuing efficiencies.