February 16, 2023
Anomalies in government grant payments are creating uncertainty for South Burnett councillors and staff members trying to draft their 2023-24 Budget.
As well, the timing of grant payments can distort public perceptions about Council losses and surpluses, according to Council CEO Mark Pitt.
“The South Burnett Regional Council is currently meeting to create a strategy for the 2023-24 financial year Budget and are looking at ongoing ways to trim costs in an atmosphere of uncertainty,” Mr Pitt said.
“Not only are we moving into the election cycle with the next quadrennial elections due in March 2024, but also in a period when the State and Federal Governments are changing their grants and funding payment cycles and formulas without consideration of the budgetary stresses this places on Councils.
“Previous reports to Council, particularly the November 2022 report, highlight the volatility of the financial assistance grants and, in particular, the issue that prepayment of the grant creates significant reporting distortions.
“These distortions are demonstrated in the second quarter review (presented) to Council’s budget committee (on Wednesday).
“While Council will receive the exact same amount of funding as allocated, the reporting system indicates a ledger loss for this financial year given the funding was allocated at an earlier point than would usually occur and at a higher level of prepayment.
“This creates a range of issues often reinforced by the media and online forums, that these ‘additional grant funds’ are available for use, providing extra services and infrastructure, and should not be considered as an income stream for funding Council’s priority operations.
“This prepayment creates difficulties with Council’s Financial Statements, particularly the Statement of Comprehensive Income, as all funds received must be recognised in the year they are received, and in Council’s Annual Report.
“In this instance, the figures contained reflect Council’s significantly higher surplus. This leads to the incorrect assumption by members of the community that Council is over charging ratepayers and should therefore lower any rates and charges levied.
“As a result, Councillors Jones and Erkens, at the 2022 LGAQ State conference, along with many colleagues, have made representations to the Grants Commission highlighting the anomalies and difficulties these changes have presented to all affected Councils.
“Councils need clarification and review of accounting standards, confirmation of time of future grants on a three-year advance basis, and advocacy for Councils to receive greater support in the allocation of the federal funding quota.”
“We still have no knowledge of what the total funding pool is for the 2023-24 financial year, and this will not be known until later in this financial period.
“We believe early payments will continue and at this stage, we have not been apprised of any amendments to the financial standards.”
Mr Pitt said that when Council adopts a budget, it can only forecast on known figures and trends, meaning the 2022-23 Budget was adopted using an existing methodology of forecasting a 75 per cent early payment of grants.
Any funding quota for Council will remain unknown until well after the adoption of Council’s 2023-24 Budget.
