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More financial pain for CVC

  The NSW Government has rejected a second application by Clarence Valley Council (CVC) for financial assistance to remediate its old sewer treatment plants (STP) at Maclean, Townsend and Ilarwill. A letter from the Parliamentary Secretary for Natural resources, Rick Colless MLC, declines the application because “all remaining funds” from the Country Towns Water Supply and Sewerage Program (due to finish on June 30) “have already been allocated to priority projects”. The letter also refers to remediation of the South Grafton STP (the site of the new depot) and notes that a CVC report included as a part of the application “indicated that funding for the demolition work can be met by council’s sewer fund reserves”. However, as it has turned out, this assumption was incorrect, due to the blow-out in remediation costs at South Grafton. A report to be tabled at next week’s meeting indicates that CVC’s sewer fund will have to borrow $2.2million (minimum) in the 2017/18 year and advises that the 1.5 per cent per annum capped increase in water and sewer charges “should be examined” for the 2017/18 budget. It also proposes a total of $4.68million in various deferrals of sewer fund projects for this and the next financial years. At the February council meeting, councillors received a report outlining the cost of remediating the former South Grafton STP, which stated that the “costs currently total $6.976million” and that the “remediation works will have an impact upon Council’s sewer fund”. “Analysis is presently being undertaken with regard to possible deferral of some capital projects, to enable suitable cash flow for the remediation of the South Grafton site,” the report stated. At next week’s council meeting that analysis will be tabled. Next week’s report states that the cost of remediation for the four STPs is “$3.303 million and potentially $4.701 million” higher than the previously estimated and “will result in a cash-flow shortfall in 2017/18 and 2018/19”. The crux of the report to council on the Lower Clarence STPs states that “if NSWEPA require all contaminated material to be removed from the three sites, the additional cost will be $1.746 million (ex GST)”. This is “$1.398 million above the current budget allocation (not including any other variations)” and is “not included in the 2016/17 budget”. The report to council also discusses a November 2015 resolution that capped sewer and water fund increases to a maximum of 1.5 per cent, per year, for five years. “This resolution resulted in a real decrease in sewer fund income in 2016/17, as the increase in charges was below inflation, and will result in a further real decrease in sewer fund income in 2017/18,” the report to council states. At the time this decision was taken it was meant “to partially offset the impact of a Special Rate Variation (SRV)”. Now that an ongoing SRV has been rejected by councillors, the report advises that “the capping of increases in sewerage charges should be examined as part of the 2017/18 budgetary process”. If the status quo remains, the report to council advises that “preliminary financial modelling for the Long Term Financial Plan, based on the $3.303 million increase, indicates that in 2017/18 the sewer fund will need to borrow $2.2million”.