Local councils are suffering from a number of financial weaknesses, including heavy reliance on tenuous grants from state and federal government, little to no spare cash for emergencies, expenses growing in excess of underlying costs, and insufficient capital works spending.
That is the view of Review Today chairman, Professor Percy Allan, who revealed the Fiscal Star report on financial sustainabilty at the Benchmarking Best Practice in Local Government conference, held yesterday in Sydney.
To avoid unsustainable revenue and spending local councils within NSW will need to achieve a budget surplus and contain the size of their broad liabilities. An increase in rates, fees and charges is also required, Professor Allan said
“The councils assessed as unsustainable would need to increase their rates, fees and charges by between 80 per cent and 200 per cent over the next 10 years to achieve financial health.
“Those rated vulnerable would need hikes in their revenue levies by 60 to 80 per cent over the same period.
“By comparison, the sustainable councils only face increases of between 30 per cent and 40 per cent between now and 2018.”
Professor Allan told Government News council response to the report should not be complacency or denial. He advised councils to instead ensure accuracy in published financial data.
“If councils think their data is reliable, then they have a financial problem that they need to get to the bottom of. The longer they leave it, the more chronic it will get.”
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