Tasmania releases review of financial sustainability

In March, President of the Local Government Association of Tasmania (LGAT), Mayor Mike Gaffney, released a new report into the financial sustainability of Tasmanian Councils.

The independent study provides a snapshot of the State’s 29 Councils’ current situation regarding issues that are impacting on their financial sustainability. It also details a suite of initiatives that will assist in improving their long term sustainability.

In 2006, after similar reports were compiled in New South Wales, South Australia and Western Australia, LGAT commissioned Access Economics to undertake its study.

It is in line with the recent work completed by PricewaterhouseCoopers for the Australian Local Government Association, which looked at the overall financial sustainability of Councils across the country.

The Tasmanian report investigates the major financial stresses on Councils and highlights an infrastructure backlog and the provision of increasing services to the community as key challenges. It also identifies areas of improvement regarding sustainable financial management strategies and suggests a range of actions for Councils to consider. It says Councils are capable of implementing a number of the recommendations internally, however, it recognises that support from other levels of government may be necessary.

In comparison to the results of the studies undertaken in other States, the report reinforces the overall health and strength of Tasmanian Local Government. Six Tasmanian Councils were found to be under some pressure in terms of broad financial health. While this does not impact on their ongoing financial viability, there will be a need to address issues associated with their long term finances. These Councils serve approximately eight per cent of the population, which is significantly less than the 20 per cent plus population figures that resulted from the South Australian, New South Wales and Western Australian studies.

According to the PricewaterhouseCoopers, National Financial Sustainability Study of Local Government, these Councils are generally likely to exhibit minimal or negative growth; have limited access to rate revenue due to relatively small populations; have limited access to essential asset management skills; and are facing expanding service provision due to rising community demands.

Councillor Gaffney said there is no need for Councils to press the panic button at this stage.

“Expenditure savings will certainly help some Councils,” he said. “The report has identified the need for Councils to more closely scrutinise rates and charges, including developer charges, with a view to resolving the appropriate mix of revenue raising and expenditure savings options.”

The PricewaterhouseCoopers national report found that there was a significant need for cash injections from other levels of government and specifically recommended the pursuit of a community infrastructure fund to assist Councils with their ageing infrastructure.

Access Economics has also recommended a series of actions for LGAT to pursue in terms of financial governance policies and processes.

Councillor Gaffney said the Association will be moving quickly to establish a Steering Committee, comprising elected members and officials, to work through the recommendations and develop a program of action to implement those that are supported.

“Issues such as the development of ten year financial plans, improved asset management practices, the establishment of audit committees and the development of service policy statements, provide a wide range of opportunities for Tasmanian Councils to enhance their overall financial sustainability,” he said.

The Steering Committee will also look at ways Councils can work together to enhance their financial sustainability and will draw on the experiences and actions taken in other States.

“The Association will seek to work with the State Government where necessary, and expects that there will be significant support for many of the self help measures proposed in the report,” Councillor Gaffney said.

“This important study provides a platform from which Councils can move forward. There are no losers in this process. It is necessary for Local Government to fully understand where we are situated and now. It is even more important that we acknowledge the negatives as well as the positives so we can get on with the job of maintaining and improving our financial sustainability.”

For further information contact Councillor Gaffney on 0409 015 253 or LGAT CEO, Allan Garcia, on (03) 6233 5972.