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Council rhetoric around forward budgeting

Council will vote on next Tuesday (April 26th, 2022) that the draft 2022-26 Delivery Program and 2022-23 Operational Plan incorporating the Budget, Capital Works Program, Statement of Revenue Policy and Fees and Charges be placed on public exhibition for a period of not less than 28 days. They are also moving that the draft 2022-32 Long-Term Financial Plan be placed on public exhibition for a period of not less than 28 days. Their projected delivery plan is based around their 2022-32 Long-Term Financial Plan - and that, of concern, is based around some very interesting assumptions. Council tells us that in preparing the Long-Term Financial Plan a conservative approach was taken incorporating known factors, examining prior year performance and trends, and making conservative assumptions for forecasting. They tell us that the service mix and level of service is assumed that the level of service will remain the same. If you have noticed a decline in maintenance of Council assets then, according to the Long-Term Financial Plan, you can expect it to remain at that level.

Controlling the dollars required to rise to the occasion and attend to the required, and timely maintenance and replacement to ensure Council assets are maintained at a Satisfactory level, Rates and Annual Charges are constrained by an indexation factor that is applied by IPART and informs the rate peg. Council makes an assumption of a 2.5% increase for future years beyond the 2022-23 rate peg of 0.7% (plus 1% growth allowance). There is no certainty of this percentage and it is naive for Council to rely on this steady % increase.

Again the General Fund assumes 1.7% (including 1% growth) for 2022-23, and 2.5% thereafter over the LTFP period. Historically the IPART Rate Peg has been 2.7% in 2019-20, 2.6% in 2020-21 and 2.0% in 2021-22. Council however have not, for the next ten years factored in climate change that exacerbates deterioration of assets and refocuses resources required along with material needs.

Council also identifies Indexation for the Water and Sewer Funds is based on the adopted Integrated Water Cycle Management Strategy (IWCMS), currently around 2% annually, however a new updated ICWMS will be adopted later in 2022, which they say will be incorporated into the 2023 iteration of the LTFP. What they fail to add is that they intentionally maximise water and sewer fees to deliver a dividend to the General Fund. While legal it is widely considered underhanded and immoral. Of interest is that they project User Fees and Other, assuming 1.7% for 2022-23 and 2.5% thereafter. That means that the community will have to annually find 2.5% more to cover a game of tennis, a visit to the pool or meet any of the other fees and charges across the shire, from DA's to inspections.

Given that the Draft 2022-26 Delivery Program and 2022-23 Operational, Draft 2022-23 Fees and Charges and Draft 2022-32 Long Term Financial Plan are going out on Public exhibition it will be interesting to see the responses.

Above: Estimates used for rate peg, inflation, wage growth, interest rates – moving at similar levels so no artificial gain/loss from differences in assumed indexation levels In the past the community have been indifferent to the point of just not bothering. Those who have contributed have known from the outset that their opinions will land on deaf ears. Next week will be little more than a box ticking exercise and business as usual. Usual Suspects are invited to read over the financials HERE

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