Brown warns of $18.5M Shire budget shortfall

– Council calls for 3% rate reduction

HOORAY! Good on Crs McEwen, Hirst and Hill.
And down with Crs Argento, Brown and Skinner.
The former voted in favour of a 3 per cent reduction in rates at last Wednesday’s Special Council Meeting, called to “consider and determine” the council’s response to public submissions into the annual budget.
The other three voted against it. Boo, hiss!
On the face of it, at least, not a popular move. Everyone wants to pay lower rates. Right?
But, oh dear, it’s not quite so clear cut as that and just weeks out from their likely dismissal by the State Government, it’s an aspiration coming very late in this strife-torn council’s run that’s unlikely to be fulfilled.
There was vigorous debate before the vote was taken with Cr Aaron Brown warning such a move would have the cumulative effect of taking $18.5 million out of the shire’s coffers, making it impossible for the shire to match government grants and affect its ability to look after roads and achieve other infrastructure renewal goals.
Crs Hill, Hirst and McEwen begged to differ.
However, on the casting vote of the Mayor Cr Don Hill, a method deciding a deadlock on council where the mayor gets two votes, the following motion was carried:
“That council call for a report to the ordinary meeting in June 26, 2019 to consider options to achieve the 3 per cent ‘rate reduction strategy’ for the 2019/20 annual budget.”
What happens if they’re sacked before then? Who knows.
The motion was moved in response to a submission by John McCombe of the South Gippsland Action Group calling on council “to honour the commitment to reduce the rates by 3 per cent and follow through by embracing the ‘growth for reduced rates’ plan”. It was accompanied a petition requesting the same, signed by a 432 people (365 from within the shire).
Cr McEwen, who was attending his first meeting since a knee reconstruction, moved the motion and crucially made up the numbers needed to pass it by the narrowest possible margin.
He said rates, closely followed by complaints about the condition of gravel roads, was the issue that residents and ratepayers complained about most.
He claimed services wouldn’t need to be cut as a result, that there was some slack in the shire’s finances to bring it about.
“We have been blessed by the work of our officers in the past few years achieving 1 per cent in savings but I think there is capacity in the budget this year to deliver a zero rate rise or possibly a 3 per cent reduction in rates,” he said, calling for a report from the officers on how this might be achieved.
Cr Aaron warned about the impact of such a move.
“This will be one of the biggest decisions we will make as a council,” said Cr Brown.
“While I agree with the direction of developing a 10-year cost reduction strategy… and that people want rates to be reduced… you have to understand the ramifications of what you are getting yourselves into.”
Cr Brown said the compound effect of having even a zero percent rate rise in one year, then going back to 2.5 per cent each year would be a reduction of $18.5 million over the course of the shire’s 15 year plan.
“It would compromise our ability to match $1 for $1 government grants, so that projects we have been able to do in the past 10 years would not be possible, we’d fail to meet working capital rates, we’d fail to meet our infrastructure and services needs and intergenerational equity requirements.
He said when the shire his the wall financially it wouldn’t be able to go for a one-off 6% or 7% rise in rates to catch up.
But Director Corporate and Community Services, Faith Page, the acting finance manager, poured some cold water on the idea afterwards when she said if the proposed rate reduction of 3 per cent, and the cost-cutting measures needed to bring it about, were considered a material change to the budget, it might need to go back to the community for further consultation.
So, even though council has narrowly demonstrated its intent to cut rates, there’ a lot of hurdles to clear before it can be delivered.