Council’s general manager Craig Deasey said the additional $108,000 the rate increase would bring to council would be “chewed up” by known cost increases.

“We know there will be at least a $20,000 increase in the waste management levy which is a State Government-imposed tax,” Mr Deasey told the Chronicle last week.

“There will also be a $15,000 increase in insurance costs and an extra $10,000 for both energy, and water consumption charges and sewerage costs for council-owned infrastructure.

“And there is a new award for salaries which isn’t known at this stage.

“The funding program for noxious weeds is going through a different process and similar funding received this year is also at risk.”

Council’s budget preparations are underway and for the third year in a row, management is expecting another deficit budget.

“This will mean reduced services, and funding commitments for programs and events will be at risk,” Mr Deasey said.

“We are currently taking Class 4 action against Martins Creek quarry (Railcorp) to regularise activities of the quarry.

“To date we have spent $35,000 and it’s still rising and we haven’t even been to court yet.”

Mr Deasey said council is “seriously looking at amalgamation”.

“With new legislative changes and the impact it will have on council’s income, it is clear that the State Government is looking at amalgamation by stealth.

“The 2.6 per cent increase does not cover basic cost increases.

“The introduction of the new waste management levy will have a big impact on small councils like Dungog and Gloucester.

“The cost is going from $10 per tonne to $20 plus CPI increases in 2010-2011 and will continue to increase at that rate until it is $70 per tonne.

“It is simply revenue raising that goes into other areas of the state and not into the region it is collected from.”

Last year council received a 3.5 per cent increase in their rates and an application for an additional 6 per cent was rejected by the minister for Local Government.

“We are not going to waste our time and energy to apply again,” Mr Deasey said.

“It is approximately 200 hours work aside from the consultative process and we know it will fall upon deaf ears in an election year.”