Small councils in Victoria are increasingly dependant on government grants, jeopardising their ability “to meet the current and future needs of their communities”, according to a new report from the Acting Victorian Auditor General, Peter Frost.
“While rates and charges have increased in real terms, this has not been enough to keep pace with councils' increases in costs,” Frost said in the June 2013 report.
Of Victoria’s 79 local governments, 21 are classified as ‘small councils’ with populations of less than 20,000 people. Located in the state’s rural areas, these councils make up 40% of Victoria’s total area, but just 4% of the population.
The report focussed on five selected small councils: Buloke, Golden Plains, Strathbogie, Towong and Yarriambiack.
“Out-of-date” asset management plans
Frost found that over the past five years small councils’ reliance on government grants has more than doubled from $33.8 million in 2007–08, to $72.4 million in 2011–12.
“Given current Commonwealth and State Budget positions and the economic climate, the audited councils' increasing reliance on grants may be unsustainable,” he said.
According to the report, while the audited small councils were aware of the “sustainability challenges” they faced, most could not demonstrate the effectiveness of strategies and actions in place to address those challenges.
“Councils' existing asset management plans contain out-of-date information, which provides limited assurance that asset management requirements are being appropriately considered,” Frost said.
Addressing the challenges
IPWEA’s NAMS.AU Group Chair, Peter Way, said the Auditor General report highlights an opportunity for Victorian councils to make better use of the NAMS.AU resources available to them.
Way pointed out the report’s findings of deficiencies in the councils’ long-term financial plans, including that many “are not sufficiently integrated with asset management”.
“Hence the value of the Long Term Financial Planning Practice Note 6 to help councils address this noted deficiency in their current practices,” he said.
Frost also reported findings that “other than narrow reviews of specific services – such as to identify cost savings – none of the audited councils have undertaken comprehensive reviews of services in accordance with the Local Government Act Best Value principles, or reviewed service levels to assess the effectiveness and efficiency of service delivery”.
This finding highlights the importance of the current Levels of Service Practice Note being developed by NAMS.AU, “which will no doubt be of great assistance to councils in addressing the above challenge,” said Way.
Read the full report online
here. –
Gemma Black
In the picture: A bridge crossing the Murray River in the Shire of Towong, one of the small councils audited in the report.