Bendigo beseeches Shorten over super shortfall

By Julian Bajkowski

The $400 million superannuation funding shortfall for Victorian councils has prompted a personal visit by Federal Financial Services and Superannuation Minister, Bill Shorten to the town of Bendigo.

The urgent talks come as pressure mounts on Canberra to rework how local government super liabilities are met so that councils do not have to strip funding from service delivery areas.

It is understood that some smaller Victorian councils have been required to funnel around 30 per cent of their revenue base to top-up super liabilities for legacy products like defined benefits schemes.

It is understood Mr Shorten will on Thursday hear first-hand from Bendigo Mayor Lisa Ruffell what projects and services the town has axed or delayed after being forced to top up its liabilities annually while Canberra and the states are able to carry forward their liabilities.They include deferred improvements to the Bendigo Livestock Exchange, building of public toilets and a bridge replacement.

“We don’t oppose Council employees receiving their superannuation entitlements. That’s not what this is about,” Cr Ruffell said.

“This is about looking at how we can improve the system so Victorian councils don’t have to regularly top up this fund to the tune of hundreds of millions of dollars.

“Having to do so reduces local government’s capacity to deliver services and build new infrastructure in Victoria.”

However Bendigo and other councils are increasingly facing an uphill struggle in terms of trying to shift their liability to be covered by the state government umbrella.

A key problem is that such a move it risks setting a precedent that the goalposts for superannuants can be moved after a scheme is set up.

So far Mr Shorten’s office is playing hardball.

“The Minister believes that superannuation is a fundamental workplace entitlement like sick leave [or holiday pay] and will meet with council and will hear their concerns,” a spokesman for Mr Shorten said.

A burning issue that Victorian councils have previously railed against is a 7.5 per cent penalty rate that may apply to overdue payments, a level of interest that is more than double the present official cash rate.

A key question is whether Victorian councils and Canberra can thrash out alternatives to shifting liabilities across jurisdictions.

Despite the hard, talk government sources indicated that there is genuine interest in finding workable solutions to liability funding.

Capital works projects to be deferred include:

  • Drainage improvements at Needlewood Drive, Kangaroo Flat.
  • Bendigo Livestock Exchange improvements.
  • Kennington Reservoir timber bridge replacement.
  • Various upgrade works at Longlea Recreation Reserve.
  • Kangaroo Flat Lions Park toilets.

Operating expenditure savings include:

  • Deferral of the White Hills and East Bendigo Heritage Study and Hospital Precinct Structure Plan.
  • Deferral of some road maintenance projects.
  • Reduction in bridge maintenance budget.
  • Reduction in Small Township grants.
  • Reduction in the level of printed information to the community.
  • Deferral of some staff appointments.

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