I refer to the South Gippsland Sentinel-Times article dated December 3, 2019, titled ‘Our councils performing badly’.
I have long held a personal expert financial opinion as a Certified Practicing Accountant that Council’s trend of accumulating underlying operating deficits (in excess of $25million over the past seven financial years to June 30, 2019) is high risk (as highlighted by the Victorian Auditor general for 2019), and coupled with a shortfall in excess of $10 million in cash to
cover reserves, and a less than optimal capital budgeting model, will require Council to generate and utilise future operating surpluses and borrow substantially to fund its upcoming capital expenditure program.
For example, the Cowes Cultural Centre (CCC) Project is being financed by borrowings of $15million and reserves of $4million (and I dispute reserve funds are available in cash).
Consequently, my view is that the CCC Project financing arrangements are a direct result of the trend of Council accumulating underlying operating deficits, and this is not sustainable.
I also anticipate Council’s borrowings will increase exponentially relative to other Councils in Gippsland including Latrobe, Baw Baw, South Gippsland, East Gippsland and Wellington, and may reach or be close to high risk.
I have discussed these matters extensively with our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), and hold some optimism that a substantial transformation can still be achieved and reflected in Council’s next strategic resource plan and 10-year financial plan due in 2020.
By way of example, should we be spending $19million (including Borrowings of $15 million) for a new CCC or should these funds be allocated to renewal and or new expenditure on fixing roads, drainage and footpaths across the Shire? It is time – time to have these crucial conversations.
This, in my personal opinion, is the ‘big picture’ financial legacy and challenge inherited by our new CEO and CFO, with major implications for the next Council and future community generations.
That said, I encourage residents and ratepayers to get actively involved in the upcoming budget discussions and submissions, and emphasise that our community has the right to be heard loudly and clearly about Council’s budget priorities.
Cr Les Larke.