QUEENSLAND councils have been challenged to find efficiency savings amounting to 12% of their operating costs as the Queensland Treasury Corporation and the Department of Local Government warn debt levels are in danger of spiralling out of control.
Between 2008 and 2012 the collective debt of Queensland's 73 councils quadrupled from $1.8 billion to $5.3 billion, driving rates up 27%, or 10% in real terms.
Queensland Local Government Association president Paul Bell told mayors and their deputies at a forum on the Sunshine Coast the cost of living was the biggest issue at the recent council elections and behind 44 new mayors and 250 new councillors winning seats in the biggest electoral clean-out since the Second World War.
Mr Bell said most of the increased debt occurred in the top 25 high-growth councils in Queensland.
The Sunshine Coast Council's debt stands at $220 million, an amount covered by cash held in short-term markets.
Mr Bell said if councils stuck to their current path, debt would rise by around $1 billion a year, reaching an unsustainable $23 billion by 2031.
Local government raised 80% of its own revenue compared with less than 50% by the State Government.
He said the Federal Government had the money, the State Government the legal power and councils had the problem.
Mr Bell said the challenge for local authorities during the next four years was to do more, and better, with less.
"The fundamental issue for us in local government is that councils do not have a growth tax and, as a consequence, do not prosper in booms," he said.
"Indeed, we suffer in trying to keep up service and infrastructure provision - but perversely feel the chills of recession and downturns as state and federal governments wind in whatever support they offer us when their budgets are under pressure.
"There is, and continues to be, a fundamental mismatch in the Australian federation between the taxing and spending powers of the three levels of government.
"As was put to me by a sage councillor early in my local government career, 'Son, Canberra has the money, the state has the legal power and councils have the problem'."
Local government was faced with a stark challenge of having to, in part or whole, drop its standards, cut back significantly on capital spending and reduce - or pull out of entirely - social services, economic development, sport and recreation and cultural pursuits.
The alternative was to embark on wholesale reform to reduce costs of operation by around 12% in real terms.
"Drastically cutting our capital spending will kill the property industry stone dead in a few short years, and our infrastructure will also start to crumble," Mr Bell said.
"Slashing services has its own political and community hardship joys.
"So we have to look to where can we re-engineer our business processes. Where can we make savings - where are the new smarter ways of doing things?
"Invent new, cheaper, smarter ways of doing things. Look outside the box, folks - this isn't one we can just muddle through. We don't have 10 or even five years. Immediate action is needed."
Mr Bell said the cumulative impact of decisions of the former Bligh Government over its final term of office robbed councils - mainly the larger ones - of about $900 million in revenue.