Responsible and decisive actions are needed now to try and avoid special rate rises in the future. That’s the message to residents following a Eurobodalla Council workshop to discuss the organisation’s financial situation and future challenges.
Councils are in trouble around the state, with 17 applying for a special rate variation this year. Councillors and senior staff recently spent two half-days reviewing the Eurobodalla’s financial situation to identify a path forward for the shire.
“Living within our means starts now,” said General Manager Warwick Winn.
“Careful analysis will identify our position, but we are a medium-sized council trying to do the work of a large council and that is not sustainable,” he said.
Mr Winn ordered a financial health check in his first weeks on the job, and quickly identified the issues of large future projected deficits, current debt, and a capital program that is too large to manage.
“We are certainly grateful for the NSW Government grants that have allowed us to build new infrastructure for the community and to build back better after the fires and floods. But the time has come to look carefully at our grants strategy.
“We must be smart and chase grants that can pay for work already scheduled and allow our staff to catch up on work already on the books.
“Next year’s work program will be reprioritised, but in the years after, we will propose reducing our capital works program to focus on finishing grant-funded projects, as well as maintenance and renewal of assets like roads, public toilets, and recreation facilities. This new and prudent approach is what we will be consulting with our community about.
“This is how we will start living within our means and hopefully avoid service reductions or having to pursue special rates variations. It will be a challenge, but one that the Council has taken up."
Mayor Mathew Hatcher said councillors are determined to do something about the financial challenges they inherited.
“We all ran for council knowing there were huge hurdles in front of us as a shire. Ratepayers and residents can be assured the councillors they elected are committed to working with the staff and the community with honesty and transparency to address these challenges.
“It means we’ll need to have brave conversations with residents, explaining why work they’d like to see right away needs to wait while other priorities are finished. With discipline and sound management, this council can set up future councils and the community for a better financial future.”
Mr Winn said he believes the NSW Government’s rate pegging arrangement for councils is broken.
“Last year, with clear knowledge of rapidly escalating costs, IPART issued NSW councils with only a 0.7% rate peg. By comparison, CPI was 6.1%.
“The NSW Government also needs to examine the complex grants process councils are forced to use to fill gaps in essential community infrastructure. The grants don’t address the cost of maintenance, operation, or depreciation, are often tied to a council contribution, and are difficult to manage.”
Mr Winn said strategic workshops will become a regular feature for councillors and senior staff.
“Eurobodalla Council has $1.7 billion in assets, annual turnover of $140 million, delivers dozens of services and has 600 plus employees - equivalent to a medium-size ASX listed company. It is prudent and good practice to make time for specific strategic check-ins, and we will".
A decent understanding of the above media release is crucial, some of the language descriptions tell us a lot. But bugger all about the owners and providers of the show.
One of the reasons our council is chasing its tail trying to catch up on infrastructure maintenance is the failure of councillors to agree with the full special rate variation requested by staff seven years ago when it was under consideration. A quick glance at the "financials" will show that much of the work to be done under the last SRV remains undone and has been carried forward year after year - sure, the fires and covid have happened in the meantime but these works didn't get the funding impetus needed before those tragedies to catch up.
The councillor most vehement about cutting the requested SRV from 15% (or so) to 8% quoting his belief that the community wouldn't stand…
“ try and avoid rate rises in the future “ , all sounds very positive , for the moment. Let’s get the facts precise, my reading of IPART documents , shows a rate increase of 1.7% for 22/23. This period is yet to finish so we have no inflation figure. The IPART figure for 23/24 is 4.3%. Staff salary EBA increases have been 1.5%, 2%, and 2% for the three financial years ending next June. One would assume the numbers for salaries will be higher in the next EBA. IPART would then incorporate wage and other inflation into future rate increases for Councils. To say rate pegging is broken, is a strong term, IPART have professional quants operating indepen…