Cash-strapped Central Darling Shire Council facing suspension

Kangaroo Dollars

By Paul Hemsley and Julian Bajkowski

The New South Wales government has moved swiftly to use its new authority to bring badly struggling local governments in the state to book through issuing a notice of suspension under Early Intervention powers.

The state’s Local Government Minister Don Page on Tuesday hit Central Darling Shire Council with a “notice of intention to suspend” based on new laws passed by Parliament earlier this year.

The financial yellow card for the Far West shire comes amid what Mr Page said were attempts by the state government “to seek answers and the inability of the Council to respond to the most basic of financial questions.”

A number of other local governments are also understood to be skirting close intervention on the ministerial watch list.

“The Council appears unable to confront and manage its financial problems and the community in Central Darling deserves to know what is going on,” Mr Page said.

“Despite all the efforts being made, I have had to make the tough decision to issue a notice of intention to suspend the Council for a period of three months,” said Mr Page.

Mr Page said that without the intervention, he feared the council might not be able to continue to operate including paying staff wages and salaries or to provide services to the community.

The Local Government Minister has given the council seven days to present its own case forward about the state of its financial matters.

If and when a suspension order is made, the state government will appoint an interim administrator after Gazetting the move.

Central Darling’s financial problems were identified in the NSW Treasury Corporation’s (TCorp) most recent financial sustainability report released in March 2013, which uncovered many fiscal issues that put it in a “very weak and deteriorating position”.

The problems included rising operating deficits due to increased maintenance works needed after several floods since December 2010; about 24.1 per cent of revenue derived from rates, annual charges and user charges and fees; and high dependence on external sources of funding.

Also in June 2012, council would have been in a situation of overdraft if it had not received the prepayment of $1.9 million of half the 2013 Financial Assistance Grants (FAG).

According to TCorp, the council reported $14.8 million of Infrastructure Backlog in 2012, a figure  which represented 13.2 per cent of the Infrastructure Assets of $112.5 million.

The TCorp report concluded that these problems might result in continuous operating deficits, excluding or including capital grants and contributions, which will make it difficult to maintain service levels.

According to the Department, the state government had already assisted the council over a number of years by providing advice and support from departmental officers including onsite visits, funding to improve the council’s asset management, and an “independent experienced mentor” to assist councillors and senior staff.

The government had also provided an increase in financial assistance grants to the council from $3.6 million in 2012/13 to $4.1 million in 2013/14.

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