Latest News

CVC: no surprises in ‘Fit for the Future’ assessment

There were no surprises in IPART’s Fit for the Future assessment of Clarence Valley Council (CVC), which was released by the NSW Government last week.
The Independent Pricing & Regulatory Tribunal (IPART) found that CVC was “not fit”; however, the council was not judged to be one suitable for amalgamation.
Instead, the Independent Local Government Review Panel (ILGRP) recommends that CVC should become a part of a ‘joint organisation’ (JO) comprised of the Clarence Valley, Coffs Harbour, Nambucca Heads and Bellingen local government areas.
The ILGRP first made this recommendation in its ‘Revitalising Local Government’ report in October 2013.
A JO’s governing body, according to that report, would most likely be comprised of the mayor of each member council, additional council representatives and participating observers or advisers from outside of local government.
The JO could establish subsidiaries to undertake specific functions – the subsidiaries would have their own skills-based boards, and could include senior council staff and people with relevant expertise drawn from outside of local government.
Coffs Harbour City and Nambucca Shire councils were found to be “fit”, while Bellingen Shire Council was judged to be “not fit”.
Clarence Valley Council met the Scale and Capacity and Efficiency benchmarks, but failed to meet the Sustainability, Infrastructure and Service Management benchmarks – and “does not satisfy the financial criteria overall”.
Clarence Valley Council foretold these outcomes during its Fit for the Future and special rates variation (SRV) community consultations.
“We consider a council’s operating performance ratio is a key measure of financial sustainability that all Fit for the Future councils should meet, therefore [CVC] is not fit,” the assessment states.
However, there was some improvement beyond what the council has forecast in the Operating Performance Ratio benchmark, which was revealed at last week’s council meeting when Thomas, Noble & Russel tabled and presented CVC’s annual audit.
In its Fit for the Future submission to IPART, CVC predicted that the operating performance result would be negative 26.6 per cent for 2014-15 financial year.
However, the actual result of the Operating Performance Ratio (General Fund) tabled by Thomas, Noble & Russel was negative 10.34 per cent.
The council’s corporate director Ashley Lindsay said: “When we take everything into account for the financial year, we’ve improved; our position is a lot better.
“Our budget deficit last year [2014/15] was predicted to be $1million, but that ended up as a $269,000 deficit.
“We are achieving improved performance and heading in the right direction.
“It’s the last 10 per cent that is going to be difficult to achieve.”
The operating performance result outlined in CVC’s IPART submission predicts that the benchmark will be met in 2019/20.
However, this includes revenue from the yet to be decided special rates variation proposal.
There was also an improvement in the ‘Own Source Revenue’ benchmark, which Fit for the Future sets at 60 per cent.
The 2014/15 estimate was 56.6 per cent per cent – the audit revealed that CVC achieved 58.21 per cent.
Mr Lindsay said that if the SRV is approved, CVC would meet the 60 per cent benchmark.
He said the council had “made better than expected progress on its benchmarks”, however, the council “can’t meet [its] infrastructure benchmarks without putting more money towards maintaining and renewing our assets”.
IPART’s chairman, Dr Peter Boxall, has pointed out that: “Where [Fit for the Future] proposals included a potential future Special Variation to increase rates above the rate peg, IPART considered whether such a future increase would be reasonable by reviewing past increases, the affordability of these proposals within the community, and what alternative options have been explored.
“The inclusion of these additional funds in the assessment of a council’s proposal does not necessarily mean that such a future special rate variation would be granted, as it would be assessed at the time the application is made.”

X