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Mayor on CVC’s financial sustainability

Geoff Helisma |

As Clarence Valley Council awaits the Independent Pricing and Regularity Tribunal’s (IPART) decision on its special rate variation (SRV) application, Clarence Valley’s mayor, Jim Simmons, has issued a statement to the media.

The IPART is due to announce its decision on May 15.

Clarence Valley Council has applied for an increase in rates of “8% p.a. (inclusive of 2.3% actual rate peg for 2018/19 and 2.5% assumed rate peg for 2019/20 and 2020/21), for three years commencing in 2018/19 (which is a total cumulative increase in the general rate of 25.97% (inclusive of rate peg) by 2020/21”.

The SRV, if granted, will be “permanently built into the general rate base from that point forward), which generates $10.298 million general rate income above the rate peg over the three (3) years 2018/19 to 2020/21 to achieve General Fund Financial Sustainability and General Fund Asset Sustainability”.

All councillors, apart from Cr Debrah Novak, voted in favour of applying for the SRV, which, if approved, is meant to assist CVC in meeting its Fit for the Future strategies and improvements towards achieving long term financial sustainability.


Sustainability, Infrastructure and Service Management and Efficiency benchmarks

Mayor Jim Simmons

Like most regional councils, Clarence Valley Council has faced up to financial sustainability concerns.
The issue of a very large road network liability, the tyranny of distance and the need for a spread of services coupled with low population density and relatively small rating income, place regional councils in a very different predicament to metropolitan councils when it comes to financial sustainability.

Add to this the recent introduction by the State Government of the need to fully cash fund depreciation of assets, increases the difficulty for regional councils to maintain reasonable service levels.

Prior to the election of the current Council in 2016, Councillors have been furnished with information about alternative service options, opportunities to reduce and remove services and has committed to a program of improvement strategies aimed at reducing operational expenditure by $8.6M over four years.

In recent months, we have also heard about the likely operational improvements to be found in reviewing our processes to ensure we are efficient and effective in the activities we undertake.

While not costed, we are assured we will start to see related savings in the coming years.

The intent of all of this activity is to spend more on our road and bridge network and reduce our deficit.
These have been challenging times, but I believe we are facing our concerns head on and we want to take our community with us on this journey.

The fact of sustainability for regional councils with all of the contributing factors is complex.

And there have been many councillor workshops and many reports to council providing opportunity for elected members to discuss and debate the issue.

We are reassured of the progress we are making by our external Auditor, Thomas Noble & Russell (TNR), a recommended external auditor of the NSW Auditor General’s Office.

I note also that TNR is a participant in our Audit Committee, appointed by Council and that this participation is proposed to be formalised at this Ordinary Meeting of Council through the recommendation to approve the amended Audit Committee Charter.

Local government cannot be compared to a business in the commercial sector.

No business is required to provide such a range of services, has its income stream regulated and restricted to the level council does or is forced by another agent, to fully cash fund its depreciation annually.

It is true that there are many things that are beyond our control, but the recent restructures of our organisation ensure that the cost of maintaining staff levels to provide agreed services does not exceed our rates and charges income, in fact it is significantly less.

In 2017/2018 staff costs are $38,916M and rates and charges income is $53,872M. The draft 2018/2019 budget to be presented to the May meeting proposes staff costs to be $39,345M and rates and annual charges to be $56,073M.
Despite Award increases of 2.5%, we will continue to be conscious of containing staff related costs.
Applying for a Special Rate Variation (SRV) was a decision of Council that was not made lightly.

As councillors we are required to attend to decision making with an open mind and regardless of our individual position on an issue, the decision of council is final.

Much as we would all like there to be another solution, the SRV in conjunction with the improvement strategies and cost efficiencies already identified, is considered by Council, to be the only way we can continue to provide the level of service that is expected by the community and invest the required dollars in halting deterioration to our transport infrastructure.

I do not shy away from the fact we have made some unpopular decisions.

We have now set our Council on the path toward a strong and sustainable future.

I have absolute faith in Council’s management team, which has provided sound advice to the elected members to make the best informed decisions possible in meeting the key performance benchmarks by 2020/2021, as is the requirement of the Office of Local Government.

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