MOREE Plains’ public finances have been given a passing grade in its annual audit as the council looks to stave off pressure on local governments across the state to amalgamate.
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Michael Griffiths, partner at accountancy and auditing firm the Luka Group, said at the time the audit was issued the council had met eight of the 10 new performance benchmarks outlined under the NSW government’s new ‘Fit for the Future’ program.
The reforms aim to make councils financially sustainable by offering low-interest loans and funds to councils who choose to merge, however critics say it sets the bar artificially high to force amalgamation.
The 10 benchmarks include six operating performance ratios, which were all met by council, and four infrastructure performance ratios. Of those, two were met.
Overall, Mr Griffiths said the books were in good order during the 2014 financial year.
“It’s been quite good this year. Compared to previous years, it’s quite a strong result; a satisfactory result all round,” he said. “[Moree Plains] seem to be matching on or improving their budget figures each year. There’s been a very strong capital outlay on road infrastructure and they have still managed their cash growth.”
The independent auditor said the council’s operating performance ratio of 1.2 per cent, although down on last year, was a particularly good sign as it was a new benchmark which many councils are failing.
Council exceeded its budgeted profit of $16,000 by $1.8 million, operating expenses “returned to normal” after years of flood recovery and net assets increased by $61 million.
On the other hand, operating revenues – excluding capital grants and contributions – decreased by 20.4 percent to $62.2 million and external debt continued its upward trend.
Mr Griffiths said the decline in operating revenues was attributable to fluctuations in the evaluations of its investments into equity markets and described it as something to be noted but not concerned about.
Similarly, he said Moree’s external debt was “within acceptable rations”.
“Their debt service ratio is sitting at 7.92 per cent, generally anything between 10 and 15 per cent is acceptable, or 10 and 20 per cent is where a council should be sitting, so [Moree Plains] is well below that level of borrowing.”
The council also failed to meet two of the ‘Fit for the Future’ benchmarks – ‘Infrastructure Backlog Ratio’ and ‘Asset Maintenance’.
Under ‘Fit for the Future’, NSW will offer $5 million for two regional councils to merge, $11 million for three and $13.5 million for a four-way amalgamation.
Councils are required to assess their current position and submit a ‘Fit for the Future’ proposal by June 30, 2015. Mr Griffiths said the council was in a good position to meet those requirements and avoid pressure to amalgamate, which could see remote villages distanced even further from their local representatives.
“[Moree Plains] have got all the mechanisms and the plans are in place, it’s up to council basically to manage their costs and they will remain sustainable into the future,” he said.
“If they keep their eye on the ball and keep strong budgeting they’ll continue on forever and a day.”
