Council focused on improving financial sustainability

Published on 22 April 2022

At yesterday’s Council meeting in Cooma, Councillors agreed to engage a qualified consultant to develop a scope in preparation for an independent financial investigation. This first step will involve Councillors’ review of costs and timing from the research provided through this scoping process.

“The information we have been receiving indicates that there are significant challenges to Council’s finances that can impact the community,” said Mayor Narelle Davis.

“From 2018 to 2022 the Council has been operating on approved deficit budgets. In 2019, this stood at a $6.2m deficit. The previous Council approved the 2021 $4.2million deficit budget which this Council is now working with.

“This elected Council, for the past three months, has been working with Council staff each week to improve the financial bottom line of Council, already reducing the $4.2 million deficit budget to a projected $3.89million for the March Quarterly Business report discussed last night. Noting this deficit is related to the required depreciation accounting for all council assets which is greater than $1billion – this includes infrastructure, property, plant and equipment.

Council’s Executive Team is now reporting its projected financial position to the Council on a monthly basis, in addition to the monthly funds management reports.

Mayor Davis noted, “Council will develop a delivery and financial plan based on the best information currently available, however this may change in light of additional information that comes out of this consultation process and other sources such as internal audit.

“This Council is aware and I have been clear with the community that difficult decisions will be required. Any changes to the financial plan will require community consultation. The Councillors and staff will be undertaking extensive community consultation on the delivery and financial plan in May 2022,” she said.

Snowy Monaro Regional Council’s draft budget for 2022/2023 will demonstrate that inroads are being made toward reducing operating costs/deficit and moving toward surplus. Without an operational surplus, Council does not have the revenue (generated from rates) to undertake significant maintenance of assets across the region.

This region has 67% more ‘roads per person’ to maintain than the average regional town and large regional councils in NSW. There are a number of other comparisons to help bring perspective to the situation and the challenges to the finances and other resources.

The number of smaller communities across the Snowy Monaro means that Council provides:

• one swimming pool for every 4,100 people, compared to the average of every 12,400
• one hall for every 900 people compared to 3,200 average
• one library per every 6,900 people as opposed to every 14,000

There are less people to spread the cost of owning and operating the infrastructure and services, which means either higher user costs or higher costs each landowner has to contribute through rates.

This Council faces a difficult financial situation in supporting a large geographical area that requires high levels of infrastructure and maintenance, such as roads, water, wastewater, buildings and footpaths. This means that Council is heavily reliant on grant funding as there is such a small ratepayer base for a very large geographical region.

The Federal Government Financial Assistance Grants program is designed to compensate communities for the relative disadvantages they face due to:

• remoteness
• lower income levels
• other disadvantage factors

However, current funding levels provided mean that less than half of that cost impact is covered, with the remaining disadvantage costs falling back to local councils to raise through rates alone from a small population.

Mayor Davis, “There needs to be a change to the level of the Financial Assistance Grant provided by the Federal Government, which has been allowed to decline over the years, otherwise these high costs of living in smaller rural regions must be covered by our community through revenue raised by rates.”