A review of financial reports from Riverina councils found Wagga City Council spent two out of every three ratepayer dollars on staff, but it was far from alone with some councils spending up to 94 per cent on wages.

Wagga City Council general manager Peter Thompson said the city’s total budget was more than double what was brought in from rates and charges, but conceded there was an impending squeeze for local governments.

“We never sit down and allocate so much to wages, we work out what services the community wants us to provide and then we cost the provision of that service including staff,” Mr Thompson said. “Barring senior staff, annual pay increases are determined by industrial representatives, we have no role in that at all. As a general rule, because rates have been pegged in recent time and that increase has been less than the award increases, we need to find efficiencies to make sure we balance our budget.”

Unlike private businesses, local governments had to meet transparency and reporting requirements that increased costs while also operating services that ran at a loss.

Griffith City Council general manager Brett Stonestreet said local governments had to provide services that the community expected but the private sector would not touch.

“Council is in the service space essentially because you can’t make a profit,” he said. “The rate dollars subsidise that, things like roads and parks and pools and libraries and theatres… user charges subsidise them but nowhere near enough to cover the whole cost of the operation.”

An Office of Local Government spokesman said there were no rules or guidelines around the amount spent on staff.

“It is a matter for each council to determine the level of human resources required to meet community expectations for the delivery of services and infrastructure,” he said. “Ultimately, councils are accountable to their electors for their decisions and performance. Different councils have a different mix of revenues, of which rates are only one component. This needs to be taken into account when assessing expenses as a proportion of rates income.”

Australian Chamber of Commerce and Industry chief executive James Pearson said instead of reducing public service wage increases, perhaps there were efficiencies that could be found.

“The capacity of the public sector to grant wages increases is divorced from the capacity of private firms,” he said. “We’re not suggesting decreasing staffing levels to a point where there is a deterioration of government services – we call on the government to maintain the efficiency dividend until such time as the budget is in surplus and a debt reduction strategy has been successfully employed… We suggest efficiency boards or panels to identify saving efficiencies.”