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NRMA Funding Local Roads notes Eurobodalla has a $34m back log: Another SRV?



With recent discussions around the capacity of the Eurobodalla residents to be able to fund the operational costs of a $51m Aquatic and performance Centre without the need to have another rate rise we learn this week that Council still has a $34m road infrastructure backlog that needs to be attended to showing evidence that the last rate hike made little overall difference. On 19 May 2015 the Independent Pricing and Regulatory Tribunal (IPART) determined that Eurobodalla Shire Council could increase the general rate amount by 6.5%, including the rate peg amount, for a period of three years. The rate variation was applied from July 2015. As at the end of the third year (July 2018), rates will now stay at this new higher level and increase every year by the annual rate peg amount set by IPART. Council told the community at the time that the (Special Rate Variation) SRV was required to: - fund the increasing costs of infrastructure renewal and maintenance works on roads, bridges, sport and community facilities, playgrounds, pathways, and public toilets - respond to the NSW Government’s Fit for the Future financial criteria- address the funding shortfall from Federal Assistance Grants - address the impact of the Independent Pricing and Regulatory Tribunal's rate pegging amount that has not kept up with inflation or the increasing cost of building and construction materials for several years. They advised that any residual funds from completed works, or after they had met their loan commitments, will be spent on infrastructure renewals to reduce the funding gap. Council at the time said "Despite making considerable savings and securing grants and external funds, we would not have been able to meet the community's needs in the years ahead with the previous rates income. With the special rate variation, we do not have to cut service or maintenance levels and can invest in and renew community and transport infrastructure for the future." The estimated income generated from this increase was approximately $0.9 million, $1.8 million and $2.8 million at years one, two and three respectively. The 2018 State of the Assets report by the Australian Local Government Association warns the proportion of infrastructure in poor condition is not decreasing despite increased spending on asset maintenance by councils since 2005 The State of the Assets report said "Ongoing under-investment in councils’ management of community assets is leading to increased risk and reduced safety. While the Commonwealth and state governments have been focused on “nation building” infrastructure projects a new analysis shows that $30 billion of community assets is in poor condition and requires “significant renewal.” . It is well known that Eurobodalla suffers a continued backlog of roadworks that it can barely keep pace with, to the point where it is speculated that Council will once again seek a Special Rate Variation via the newly elected Council after September 2020 to address the road and overall infrastructure backlog inclusive of public buildings, footpaths, playgrounds and bridges. This fear of not being able to maintain assets is one of the principle drivers of why the Council steers away from any gifted infrastucture such as accepting grants for fish cleaning tables and fishing platforms as these come with no ongoing maintenance contributions. On that point the $51 million dollar proposed aqautic centre and performance space also does NOT come with operational or maintenance contributions from the State and Federal benefactors and as such the Council will need to find a minimum of $2m per year to run the facility from funds it presently doesn't have sourced or allocated. Additional to all of that the NRMA Funding Local Roads report released this week finds Eurobodalla underperfoming on trend with a considerable deficit ratio and a backlog of $34m .


Ratio calculation – infrastructure deficit to roads grants funding This ratio calculates the size of the funding task required by local councils to clear their backlog. A ratio greater than 1 means that the council has an infrastructure deficit that is higher in dollar value than the existing recurrent funds received from the Australian and NSW governments. The greater the ratio, the higher the funding task to clear the backlog. (as can be seen with Eurobodalla they injected the backlog with the Special Rate Variation but then figures showed the deficit bounced back in 2016-2017) It is reported in the Bay Post (Jan 24th, 2019) that Council's Director of Infrastructure said “It’s important to note the backlog has been reducing steadily, but under-funding from state and federal governments is one of the reasons for this backlog” yet the NRMA report indicates that there was marked increase (see above) in Road Grants in 2016-2017 for Eurobodalla. NOTE: The financial information used in the NRMA report is sourced from the annual financial returns of each local council in NSW. As part of its financial statutory reporting, each council is required to submit a report on the condition of its public infrastructure assets known as Special Schedule No: 7 The tables presented in the NRMA report use the following financial asset information for roads from each council: 1. Carrying value of the road asset class. 2. Estimated cost to bring council’s infrastructure asset to a satisfactory standard, if they are currently not of an adequate standard. 3. Required maintenance level to keep the Council’s existing assets

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