IN ORDER to meet State Government ‘Fit for the Future’ requirements, Bellingen Shire Council may raise rates 18 per cent annually until 2020.
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This scenario was given as one of three at last Wednesday’s extraordinary council meeting. The other two options: a six per cent rise per year until 2025 or conversely, slash the budget by $1.5 million annually until 2025.
The proposals took at least a couple of councillors by surprise who were under the assumption that last year’s Special Rate Variation (SRV) was the budget remedy to fund infrastructure while keeping council services in line with community expectations.
“Sixteen months ago we agreed on Long Term Financial Plan (LTFP),” councillor Gordon Manning said.
“Where is the integrity of the process after all the angst over the SRV … at the time, it was clear that the SRV would not solve all the problems, but management had a clear mandate to present cost saving measures to the councillors.
“The Fit for the Future process has clearly put the blow torch on all councils. This is a good thing and enables councils to clearly enunciate their situation … but it does not give councils the natural right to simply go for further rate rises, or slash and burn, without clear and detailed analysis and consultation.
“The current LTFP should remain in place with adjustments from the expected outcomes of the current financial year. If we don't meet Fit for the Future ratios, so be it, and this should be simply explained.”
Fit for the Future assesses councils on their ability to be sustainable and efficient, effectively manage infrastructure, deliver services for their communities, and have the scale and capacity to engage effectively across community, industry and government. In June 2014, Bellingen Shire Council was benchmarked by the State Government as failing five of seven key long-term performance indicators and according to general manager Liz Jeremy, it’s this report that has necessitated a new plan.
“The Independent Local Government Review Panel recommended council should stand alone, and be a member of a Joint Organisation (JO),” Liz said.
“As part of the process, council is completing a Fit for the Future submission and this has included providing scenarios as to how the shire could meet what is expected both in terms of financial responsibilities.
“In summary, the criteria includes a range of ratios which council will be assessed against including operating performance, own source revenue, asset renewal and backlogs as well as debt servicing ratios. Though it may seem we have just undergone assessment, last year’s SRV was specific for infrastructure projects … it was not undertaken in the context of the Fit for the Future program, or the ratios that councils are required to address now as part of the Fit for the Future submission.”
The Long Term Financial Plan offers some insight into council’s balance sheet: wages which make up 34 per cent of council’s outgoings and revenue from rates and annual charges at 42 per cent.
The report notes “there are many factors outside the control of council which may heavily influence Bellingen’s performance into the future including: High rainfall with frequent flooding events; large portions of non-rateable land (State Forests, Crown Reserves and National Parks); and socio economic factors”.
While Liz has not specified what, if anything, happens if Fit for the Future guidelines are not met, the report notes there are benefits such as access to a NSW Treasury Corporation (TCorp) borrowing facility that will save on the cost of borrowing; and priority access to other State funding and grants.
“Though we have put for models for a Long Term Financial Plan, it’s important for people to know that council’s decisions are made year-on-year in terms of funding arrangements and from herein it is envisaged there’ll be a broad community engagement process.”
Liz said council had workshopped the Fit for the Future program on a number of occasions, briefed key interest groups, convened a focus group and established a Fit for the Future Information Centre on council’s website.