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THREE Hunter councils have been spending up big on staff, with their bills for salaries and wages outstripping increases in average earnings.

Maitland, Cessnock and Lake Macquarie councils’ bills for wages and salaries rose by 28 per cent, 22 per cent and 18 per cent respectively from 2011 to 2014.

The equivalent figures for Newcastle and Port Stephens councils was 3.8 per cent and 7.8 per cent respectively.

Tuesday is a crucial day for councils – it’s the deadline to lodge submissions to the state government’s Fit for the Future reform program. And while some councils appear to be fattening up for the future, the Baird government is looking to merge councils. It is also promising to put downward pressure on rates, but some say the reforms will give councils more freedom to increase rates.

As for pay packets and other costs, the reforms aim to better control council expenditure.

The latest Australian Bureau of Statistics figures show average earnings were rising by 2.7 per cent a year.

The United Services Union insisted it was not ordinary council workers who were receiving  pay rises  well above the average. 

The union’s northern region manager Stephen Hughes said the big rises could be going to management.

Wages for ordinary workers rarely exceed the rate pegging amount, Mr Hughes said.  Annual wage rises in the 2014 award were 2.6 per cent, 2.7 per cent and 2.8 per cent, he said.

Maitland, Cessnock and Lake Macquarie councils defended their rising bills. 

‘‘The annual increase for salaries and wages applied in 2014, which includes managers, was 2.75 per cent,’’ a Lake Macquarie council statement said. ‘‘Compared to similar councils across NSW, Lake Macquarie council operates comparatively with a lower employee cost per capita and an equivalent or higher level of service.’’

At last week’s budget, Treasurer Gladys Berejiklian said the government had ‘‘kept expenses under control’’. She said it was ‘‘living within our means’’ and ‘‘disciplined in wages policy’’.

Asked whether the same should be expected from councils, Local Government Minister Paul Toole said: ‘‘Councils must spend every cent of ratepayers’ money carefully, wisely and in line with community expectations.

‘‘It’s important that we do everything possible to put downward pressure on rates,’’ Mr Toole said.

Mr Hughes  disputed that in regards to ‘‘Fit for the Future’’.

‘‘They’re saying if councils voluntarily merge, they will lift the cap on rates,’’ Mr Hughes said. ‘‘On top of that, they’re telling councils they’ll receive extra funding and the ability to raise additional rates in a way they can’t now.’’

This is backed by a state-appointed panel’s report, which said in most cases rates  needed to rise by ‘‘substantially more than the current annual peg’’ if councils are to achieve sustainability.

However, the report said there should be ‘‘greater public scrutiny of councils’ revenue and expenditure decisions and a heightened awareness of the need for, and key elements of, sound financial management’’. 

It said the minister must retain power to intervene where  ‘‘evidence suggests a council is imposing excessive increases and failing to control expenditure’’.

Mr Hughes said NSW was the only state that had rate pegging, which usually limited rate rises to an average of 3 per cent a year.

‘‘Three issues have to be addressed: cost shifting, lack of funding and rate pegging,’’ he said.

The panel report said cost shifting had been ‘‘overstated relative to other factors’’.

‘‘Local government does have legitimate concerns about rating exemptions and concessions and the way some fees and charges are fixed below cost,’’ it said.

The panel concluded Lake Macquarie and Newcastle councils should merge, but both oppose this.

A close look at the two councils’ finances shows they have been trading places in recent years.

In 2011, Lake Macquarie council had 885 full-time equivalent employees, while Newcastle council had 926. By 2014, Lake Macquarie had 927 full-time equivalent employees and Newcastle had 870. Lake Macquarie council’s expenditure rose from $170 million in 2011 to $194 million in 2014, while in Newcastle,   spending decreased from $228 million  to $223 million. 

Revenue from rates and annual charges rose at Lake Macquarie council from $102 million in 2011 to $128 million in 2014. In July 2012, a massive rate rise of 55 per cent began over seven years in Lake Macquarie, with business rates rising by 71 per cent, on average, over the same period.

From July 1, Newcastle council will increase rates by 46.9 per cent over five years. Maitland council introduced last year a rate rise of 63.2 per cent over seven years.

The Newcastle Herald reported on Saturday that rates in a merged Maitland-Dungog council would have to rise above this. Maitland council’s bill for wages and salaries rose from $17 million in 2011 to $21.8 million in 2014, while Cessnock’s wages and salaries’ bill rose from $14.8 million  to $18.1 million.