Strapped councils demand superannuation break

By Paul Hemsley

The Municipal Association of Victoria (MAV) has ratcheted-up its campaign for local councils to be given a funding bail out to cope with an escalating series of budget cuts and funding shortfalls.

The demands for new money come as a $396.9 million superannuation shortfall looms over local governments which could soon be forced councils to pay out than they originally budgeted for into to a fund that was closed to new members in 1993. The payments are due July 2013.

Councils are obliged to continually pay their liabilities to the Local Authorities Superannuation Fund (LASF) as they are due. However councils argue that because all payments become due at once results in councils are stuck finding adequate cash to cover it.

They claim that this contrasts sharply with the position of state and federal governments’ superannuation debts which collectively exceed $100 billion in unpaid liabilities.

MAV President Bill McArthur said the cumulative impacts of the super liability and other factors on councils were “unsustainable”.

Councils don’t have the “massive pockets” to keep taking more responsibilities, Mr McArthur said.

In addition to the super shortfall, a $24.4 million cut to financial assistance grants, a $17 million funding cut to care programs and the burden of the state fire levy meant that councils could carry the financial strain on their own for so long.

Mr McArthur said other cost pressures taking their toll on councils included the carbon price, landfill levies, illegal dumping, stricter environment protection standards, emergency management, school reforms and changed electric line regulations.

“And the list goes on… and on,” he said.

Mr McArthur argued that state and federal governments wrongly assumed that rate payers can “sustain one blow after another”.

“Governments need to give genuine consideration to the snowballing impacts of their decisions,” Mr McArthur said.

The call to ease the burden on councils doesn’t necessarily involve grants from state or federal governments. Rather, Mr McArthur said, reforms needed to be urgently implemented to protect councils from future superannuation shortfalls.

He said the Australian and Victorian governments should seize upon low cost legislative reform to exempt councils’ superannuation scheme.

“To repeal the federal legislation and introduce state legislation is cost neutral to the Victorian Government’s budget bottom line and will mean the Australian Government must forgo $68 million in contribution taxes,” Mr McArthur said.

According to Mr McArthur, councils should operate under the same rules that apply to state and federal superannuation schemes.

“Local government deserves to be shielded from unfair superannuation costs and treated in the same way as other exempt public sector defined benefit schemes,” he said.

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