Byron Shire Council (BSC) has been put on notice that its poor financial performance is risking the future viability of the council as a standalone entity.
New South Wales Treasury Corporation (TCorp), which was last year appointed by local government minister Don Page to report on the health of the state’s 152 elected councils, released a report card on each council this week.
After looking at each council’s financial history and applying a range of comparisons, TCorp warned that around 25 per cent of councils – including Byron – were in danger of failing financially within the next decade.
Of the four north coast councils, Tweed performed best financially, followed by Ballina. Lismore, like Byron, came in for criticism in its attention to road building and asset renewal.
But Byron GM Ken Gainger says successive state governments are partly to blame for the position of councils around the state, with a combination of cost shifting and rate capping hampering councils’ attempts to balance the books.
He added that this week’s announcement put in perspective the council’s decision last week to sell the Ocean Shores Roundhouse site and use the cash to start an infrastructure fund.
The TCorp report on BSC says, ‘Based on our review of both the historic financial information and the 10 year financial forecast within Council’s long term financial plan we consider Council’s financial position to be weak and it is deteriorating in respect of its longer term sustainability’.
While the current state government has not changed its election promise not to force troubled councils to amalgamate, it has avoided restating the commitment since the report cards were issued earlier this week.
The report drew attention to four key points, in particular the council’s infrastructure backlog and the deteriorating condition of its roads. These were: operating deficits; maintenance and asset renewal; road repair backlogs; and an ageing population.
Mr Gainger said Byron Shire Council was not alone in needing to partner with the community in coming up with solutions to structural financial challenges.
‘This report shows that while the community has a right to be concerned about how Council will sustainably fund assets and services over the long term, the situation in Byron Shire simply mirrors what is occurring in other NSW local government areas, and particularly across the majority of the north coast,’ he said.
‘The report highlighted there are some features unique to north coast councils that place extra pressure on our finances. These features include being located in an area highly prone to floods and storms, hosting holiday peak crowds that place great pressure on facilities, the region’s popularity as a place for retirement, which makes ageing populations a significant issue, and a high demand for a variety of services due to the age mix of local and tourist populations.’
Mr Gainger said it was important the community was aware of the information in the Treasury report.
TCorp reported that the council had ‘incurred increasing operating deficits (excluding grants and contributions for capital purposes) in each of the past four years, and these deficits are forecast to continue over the forecast period’.
It advised Council was not spending ‘sufficient amounts on maintenance and asset renewal and in the long term this will reduce the quality of assets and potentially impact on the provision of services’.
Unsurprisingly, the report said that road infrastructure backlog is already at a critical level, and further underinvestment will impact on the quality of services offered to the community.
Finally it warned that ‘with an increasing ageing population Council needs to address these issues and consider means of generating additional revenues or reducing operating expenses.
The report said that Council had ‘significant cash and investments reserves’ and advised that ‘the expenditure of part of these reserves would better enable asset renewal and maintenance’.
Mr Gainger said, ‘further, extensive, community consultation will be required as we proceed to implement our reform package, comprising a combination of revenue increases, expenditure reductions and service level reviews’.
‘With the state government currently reviewing the local government sector, the Byron Shire community has to be prepared to make important financial decisions now to make sure the Byron Shire has a sustainable local government into the future; one that understands and is connected to the community, but also one that can afford to provide the infrastructure and services the community expects.’