Local governments are responsible for more than just delivering services and maintaining infrastructure in the present—they also must ensure that their financial decisions do not unfairly burden future generations. This principle, intergenerational equity, is a cornerstone of responsible financial planning. It ensures that today’s ratepayers fund the services they use. At the same time, significant infrastructure investments and long-term liabilities are managed in a way that does not leave future communities with an unsustainable financial burden.
Intergenerational equity is about fairness across time. It recognises that communities evolve, populations grow, and infrastructure ages, meaning that today’s financial choices will have lasting impacts for decades. Councils that fail to account for intergenerational equity risk create financial imbalances that can lead to excessive debt, deteriorating infrastructure, and drastic rate increases.
The Risks of Ignoring Intergenerational Equity
Short-term decision-making is one of the biggest threats to intergenerational equity. When councils freeze or artificially suppress rates to minimise financial pressure on current ratepayers, they often do so at the expense of future generations. Essential maintenance is deferred, infrastructure investment is delayed, and eventually, these costs accumulate to a point where they can no longer be ignored. The result is that future residents are forced to pay significantly higher rates to cover the neglected expenses, leading to an unfair and unsustainable financial burden.
A prime example of this is infrastructure management. Roads, water systems, public facilities, and waste services require ongoing investment and eventual renewal. If funding for these assets is postponed or reduced to avoid rate increases today, the cost of replacement or repair later will be significantly higher. Poorly maintained infrastructure deteriorates more rapidly, leading to more frequent failures and emergency repairs—both of which come at a premium. Instead of spreading costs fairly across generations, councils that ignore intergenerational equity will transfer an excessive financial burden onto future residents.
Another risk is the accumulation of unsustainable debt. Borrowing can be an effective tool for funding long-term projects, but only if managed responsibly. If councils rely too heavily on borrowing to cover operational costs or defer necessary rate increases, they push the repayment burden onto future ratepayers. This can lead to a situation where councils are forced to make drastic cuts to essential services or impose significant rate hikes to meet debt obligations.
How Councils Can Incorporate Intergenerational Equity into Financial Planning
To ensure that financial decisions are fair across generations, councils must adopt a long-term approach to planning and budgeting. This means taking a strategic view of funding needs, asset management, and debt levels rather than focusing solely on short-term affordability.
A key aspect of this approach is robust rate modelling. By using advanced financial modelling tools, councils can forecast future revenue requirements, assess the impact of different funding strategies, and structure rates to ensure steady, predictable increases rather than sudden financial shocks. This helps spread costs fairly across current and future ratepayers.
Asset management planning is another critical element. Councils must ensure that infrastructure maintenance and renewal programs are adequately funded so that assets are kept in good condition for as long as possible. This reduces the risk of large, unplanned expenditure spikes and ensures that future generations inherit well-maintained, functional infrastructure rather than a backlog of costly repairs.
Debt management must also be handled responsibly. While borrowing is often necessary for large-scale projects, it should be structured to align the repayment period with the lifespan of the asset being funded. This ensures that the people benefiting from an asset contribute to its cost rather than placing the entire financial burden on either current or future ratepayers.
Community engagement and transparency play a crucial role in supporting intergenerational equity. Ratepayers are more likely to accept necessary increases when they understand their rationale. Councils should actively communicate how their financial strategies ensure fairness across generations, making it clear that responsible planning today prevents financial crises in the future.
A Fairer Future Starts with Smarter Planning
Intergenerational equity is not just a theoretical concept but a fundamental principle that ensures councils make responsible, sustainable financial decisions. Without it, communities face the risk of crumbling infrastructure, skyrocketing rates, and unsustainable debt burdens. By planning, balancing today’s needs with tomorrow’s responsibilities, and engaging in transparent financial management, councils can ensure that every generation contributes somewhat and benefits equally.
Local governments are the stewards of their communities, not just for the present but for the future. Their financial decisions shape the lives of ratepayers not just today but for decades. Ensuring intergenerational equity in financial planning is not just good governance but an obligation to the future.
