Eurobodalla Shire Council expects to post a cumulative deficit of more than $48.2 million over 10 years, before capital grants and contributions, even if its proposed special rate variation is approved.
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If the variation is rejected, council’s cumulative net operating result before capital grants and contributions would be a deficit of $58.8 million after 10 years.
The figures, which were required in Eurobodalla Shire Council’s application to the Independent Pricing and Regulatory Tribunal (IPART), forecast an annual net operating loss of $4.6 million in 2015-16 – the first year of the proposed special rate variation.
The deficit falls within the third year of the proposed rate variation to $3.7 million, however grows steadily to year 10, when a $5.3 million loss would be posted.
Without the rate rise, the situation is much worse, with at least an extra $1 million added to each annual deficit.
Council’s finance director, Anthony O’Reilly, who declined to be interviewed but instead answered questions via email, said that even if it was approved, the application for a rate variation of 6.5 per cent over three years would only address “some” of council’s financial challenges.
These were the backlog of infrastructure, which grows each year, and the increasing ongoing costs of maintaining and renewing infrastructure.
Mr O’Reilly said council had made “significant savings” in recent years, and he expected that to continue.
“Despite this, we still do not have sufficient funds to continue to provide the current standard of infrastructure and services and to address the backlog,” he said.
“If a SRV is approved, we will continue to advocate and apply for funding from the NSW and Commonwealth Governments to address the deficit.”
He said council would focus on making savings by improving its procurement and asset management practices, improving productivity, regularly reviewing service delivery and safety practices, using better work practices and technologies and collaborating with neighbouring councils and governments.
Mr O’Reilly said if the rate rise was rejected, council would be required to “significantly cut current service levels”, including the maintenance and renewal of community and transport infrastructure.
“How we do this, and how we move towards financial sustainability will be addressed by council through its long-term financial plan,” he said.
Asked why council did not initially flag the need for a larger SRV, Mr O’Reilly said councils must consider the capacity of their community to afford an increase.
“In Eurobodalla, we first raised that we may need to apply for a rate variation in 2011 during the community consultation phases that informed the development of our first community strategic plan,” he said.
“Later, during our budget consultations in 2012, we also asked residents and non-residents to provide feedback on a possible rate variation.
“In surveys, submissions and public information sessions, we were told that 62 per cent of residents and 68 per cent of non-residents would support a rate variation above the rate peg amount set by the NSW Government.
“Our initial proposal of 8 per cent was based on this feedback, as well as being a way to deliver some of the new projects our community has asked for, and to look after our infrastructure at a standard that meets community expectations.”