June 12, 2013
South Burnett Mayor Wayne Kratzmann confirmed today a roads levy would be included in the upcoming Council Budget, on top of the previously announced rates rise of 5.9 per cent.
Addressing today’s Council meeting, he said “fiscal reality” was the most pressing issue faced by Queensland councils.
“Councillors can no longer rely on Federal and State Government assistance to bail us out of financial stress, as has been the case through grants and subsides over many years,” he told the meeting, which was attended by Local Government Minister David Crisafulli.
“Whilst they still exist in part they can no longer be seen as the savior in our time of need.”
He pointed to Queensland’s $80 billion debt and the Federal Government’s $250 billion debit.
“Some economists are of the view that the economy is in recovery, our dollar on a downward spiral. Basically good news. however, it may be accompanied by an increase in the cost of money,” Mayor Kratzmann said.
“This in turn will result in increased interest rates on our loans, which will in effect cost governments, including Councils more in the future in debt repayment and therefore redemption.
“Under the Local Government Act, Councils are required to be financially sustainable in not only the short term but also the medium and long term.
Councils can no longer make decisions to please everyone in these constrained economic times as there is not enough money to achieve this goal.
Cr Kratzmann said the South Burnett Regional Council had suffered significant “financial shocks” since its 2012 Budget.
“At that time, I stood before you and declared a strategy that if followed, subject to identifying operational savings of $1.4 million and a 5.7 per cent general rate increase, then the South Burnett Regional Council would achieve a balanced budget.
“We walked out of these chambers almost 12 months ago with a clear vision and subject to no major shocks; had a positive outlook of financial sustainability. I did say ‘no shocks’ but in reality we were shell-shocked.
“Firstly, the loss of TIDs (Transport Infrastructure Development Scheme) funding from the State and then being hijacked by our own Regional Organisation of Councils. Yes regional co-operation is alive and well except it seems when dollars are involved!
“Council could have got over that hurdle, however a 12 per cent decrease to our Commonwealth Financial Assistance Grant brought us to our knees; $900,000 wiped from our grant threw the necessary savings we had already made out the window, and yes the worst was still to come with the destruction of our road network, community infrastructure and farming enterprises not once but twice in early 2013.
“In summary, the government cuts plunged the 2012/13 (Council) Budget into deficit.
“Not to be deterred, (we are a resilient bunch here in the South Burnett), we embarked on a further savings and productivity plan which will result in an end-of-the-year budget for 2012/13 that is balanced.
“Necessary savings in our operations of $1.4 million were not only realised but have been exceeded.
But we have cut to the bone. Key staff have not been replaced and existing employees asked to take on additional roles.
“This however comes at a cost and hence we do not have this as an option from this time forward.
“Deficits or surpluses are carried forward, but in the case of a deficit, it means less money is put into reserve for capital works in the years ahead.
“Continued annual deficits, in effect impact on the capital works program which translates into condition deterioration of our assets. In other words, assets deteriorate because repairs cannot be funded. Assets of this Council are already in what our managers call a state of poor condition, particularly our roads, buildings and infrastructure.
“Also, the impact a few years ago by the previous State Government to remove the 40 per cent subsidy for water and wastewater has impacted on our Council as it embarks on a way overdue water and sewerage capital works program.
“The financial incompetence of the former government will ensure that the current State government has no chance of returning the much-needed subsidy to local councils in the near future.
“This Council’s infrastructure upgrades will need to be paid in full by borrowings and setting a price path to enable Council to pay for this vital service will be the strategy we have no choice but to pursue.
“We are all aware of the need to fund water and sewerage (wastewater) infrastructure. Decisions that should have been made yesteryear when 40 per cent State subsidies were available were not taken.
“The legacy left for this Council is unfortunate but we need to take remedial action and get it right.
“In doing so, Council’s rates will still be much lower than many other Councils. This is to be applauded but at some point the investment must be made and paid for by our communities.
“The State Government advocates for local government to reduce debt, recover outstanding rates and where possible form public/private partnerships. All of these strategies may ease, to some extent, the budget difficulties that are facing councils.
“It is noted that the Queensland Audit Office recently reported concerns about 16 of the 73 Queensland councils. Whilst thankfully, our Council is not currently one of them, the worry is that a trend has emerged in our sector.
“Council is facing some tough decisions when we put together the 2013 through to 2016 budgets. No doubt we will not please everyone but we cannot keep running up debt because at some stage it has to be repaid. We should not leave unnecessary debt for the next generation. We cannot keep operating in a deficit because as pointed out earlier, this simply means that our assets are deteriorating.
“The credit card management that has been seen over the past decade in the Federal and State tiers of government is no longer acceptable.
Under my Mayoral stewardship, I will be doing all in my power to ensure that prudent decisions are taken for the South Burnett Region by the Council. I do not intend to adopt populism as my political platform. I do, however, intend to adopt a leadership platform that is based on prudent decision making with the long term in mind. I encourage all tiers of government of all political persuasion to do the same.
“This address is delivered to enable transparency of decision-making and to inform our community. The South Burnett community needs to be aware of the pressures facing our Council.
“I am not ruling anything in or out but we intend to stick with previous announcements that general rates will rise by 5.9 per cent in the 2013/14 Budget. I am aware that some councils are talking about considerably greater increases. I wish those Council’s well in their deliberations.
“Councils like our South Burnett Regional Council have no choice but to move to a levy for roads.
“Council has not done so in the past, unlike other councils, but unfortunately we cannot sustain these increased costs into the future. The CPI for road construction materials has increased by about 8 per cent per year for many years and there is no evidence to suggest that it will fall.
“In fact, it is possible that 8 per cent may be at the low end as we go forward. This has a direct impact on Council’s purchasing power. Therein lays a challenge for Council.
“Work continues in refining the 2013/14 Budget and our ratepayers can be assured that prudent decisions will be made to position the South Burnett to be financially sustainable into the future.
“Councils across Queensland are in a precarious position. They are cash strapped yet often carry outstanding/unpaid rates to the effect of 8-10 per cent.
The Local Government Minister has made it clear that Councils need to be proactive and collect overdue rates. This will help cash flows. Our Council is on this case and is now being proactive to address our outstanding rates. There has not been one property sold for overdue rates in the history of the South Burnett Regional Council. In fact, we have some owners owing rates for 7-8 years. Whilst not politically palatable, it cannot continue.
“Some ratepayers now see more value in paying for a mobile phone then their roads, rubbish collection, water, parks, libraries etc. Council needs to get out and sell the value of Local Government services.
“For far too long, people have taken local government services for granted. An attitude change is required by those who think that water is pumped cost free, sewerage magically disappears down the toilet, roads get resealed and repaired cost free, pools, libraries, and Visitor Information Centres are revenue raisers. NO they are not. They cost an enormous amount to run and maintain.
“Community amenity comes at a cost – it is not free – someone has to pay.
“Let’s break it down, if you live in a garbage collection area you currently pay $2.80 to have your smelly bin (or stinky bin as my grandsons call it) removed without a hitch on a weekly basis.
“Every time you have a shower, wash your hands, water your garden, the water suddenly appears.
“A normal family with two adults and two children pay approximately eight cents every time they go to the toilet. Is that value for money? Damn right, it is and I certainly can assure you, if you are busting to go, there is more value in an eight cent pit stop than a 10 cent text.
“It is time to start promoting and selling what we do, no one else would do it for these prices.
“What I am saying is that users of our services have to pay and some of us have got our priorities wrong.
“We are effectively taking the basics of our lifestyle for granted and replacing these with flat screen plasmas, iPods, iPads, mobiles etc.
“Is the reason why our services are not valued, or seemingly not, due to the fact that we have lost our way? Are Councils throughout this wonderful State, despite using the latest technology, still thinking and governing like a Council from the 1960s?
“Do our constituents still want what we provide? If this was a brand new amalgamated Council some five years old, with no brought forward baggage (‘assets’, as our auditors would call them), would we be providing those services that we currently do?
“I don’t think so. We would not be building halls in every community, constructing swimming pools in every town, duplicating services across the region.
“Or would we be working hand-in-hand with government and private enterprise to provide a transport service on a daily basis throughout the South Burnett, working with health agencies to make people’s lives better, driving economic development and tourism with outcomes. The list and thought process goes on and on.
“Too often the decisions we want to make are hamstrung by the decisions of the past. We need to move on from this.
“Something is wrong and a rethink is required and it’s not too late. We live and work here by choice, we become Councillors and staff by choice but in 2013 we have no choice but to change and refocus.
“I challenge all in the South Burnett to reorder their priorities and value what this Council does and place that certainly below family and health, but on top of technological tools and devices.
“This Council is here to provide good governance for our region, for now and the future. Our legacy will be good roads, water and amenities, including parks and a revitalization of our CBD’s though our streetscape programs.
“I am calling on my fellow South Burnett residents and ratepayers to support Council, get behind and work with your elected representatives and our staff. In return we will give you the following: An assurance that our Council and staff are committed, and will deliver in a cost-effective manner.
“We will resist the temptation to make the easy and popular decisions that are not prudent, as Council is charged with spending ratepayers’ hard-earned money to ensure value for money. To this I am 100 per cent committed.
“In closing, this address is aimed to provide all of the South Burnett with a picture of the future that this Council will bring to fruition.
“This picture will be framed in the Budget which I will deliver on July 3.”
Related articles:
