THE Bass Coast Shire Council is looking at breaking open a $4.5 million piggy bank.
The money is stashed in a Long Service Leave Reserve no longer required by council and Cr Les Larke says it’s time to look at unlocking it.
At a council meeting last week, he called on councillors to support a report on the consequences and implications of releasing the funds.
Councillors unanimously voted in favour of the motion. Cr Larke said the $4.5 million could be used to fund more capital works, reduce council debt, or both.
He said occasionally one comes across an organisation said to have a “lazy balance sheet”.
He maintained he wasn’t implying council’s balance sheet was lazy, but said the motion asked for a report on why council has both provisions and a reserve for Long Service Leave (LSL).
“For our council, we appear to have a reserve which is not required under legislation, in addition to a provision for Long Service Leave which covers our total Long Service Leave liability for all staff.
“Including, for example, coverage for staff recruited from other councils and the associated Long Service Leave liability.”
Following the meeting, he used the shire’s CEO Paul Buckley as an example, saying he may have had an LSL liability when he transferred from Latrobe.
“What happens is that liability gets transferred to Bass Coast when he’s appointed and Latrobe pays an amount to Bass Coast to cover it.”
Cr Larke also said there are 19 “large” shire councils and only three of those still have the reserves, the largest reserve having about $400,000.
‘We’ll be patient’: Cr Larke
Following the meeting, Cr Larke said using cash from the reserve would not short-change employee benefits.
“It doesn’t impact any liability recorded for Long Service Leave, it doesn’t short change the employee entitlements, it has no impact whatsoever on the employees.”
On face value, it appears the council has
doubled up, he said.
“We just want to make sure there’s not $4.5 million sitting there for no reason covering a reserve that we don’t really need.
“But there may be other reasons which we haven’t been able to get from the CEO at this stage that when the report comes in, we will consider in a prudent way.
“If we’re able to release that $4.5 million or a good part of it, it just means we’ve got more money available.”
He said the money could be used to fund more capital expenditure, including new projects, reduce council’s borrowings or both.
“You may do a bit of each and there’s plenty of expectation around the shire to spend money on new works too, capital works, so we might be able to unlock it but we’ll be patient and wait until the CEO comes back to us on that.”
According to the council’s 2017-18 Budget, the LSL Reserve was forecast to have $4.531 million at the end of June 30, 2017 and $4.631 million a year later.
Under the purpose of the reserve, the Budget says “This reserve contains the nominal value of the LSL obligations to council staff. This reserve was required by regulation until relatively recent times.”
Cr Larke had presented a motion at last month’s council meeting calling for the funds to be released, but Mayor Cr Pamela Rothfield rejected it because it was “alternate motion” to the Council Plan 2017-21.
Mr Buckley will present a report to council in September on the consequences and implications of releasing the reserve’s funds.