Audit finds Palerang sustainable alone financially
Questions re Queanbeyan’s financial future
Amalgamation: in Minister’s hands and a political decision
Councils could be dismissed as early as end of month
A majority of Queanbeyan councillors cast a ‘we have no choice’ kind of vote for the full merger proposal with Palerang, attached to a wishlist of conditions including $30 million for costs and infrastructure catch-up, plus the ability to cut Palerang staff.
The successful motion by Mayor Tim Overall also says if these conditions are not met Queanbeyan would fall back on supporting partial merger with western Palerang only.
The vote was contested by councillors Brown, Burfoot and Winchester arguing that Queanbeyan should stick to its stand-alone previous position and just say “no”.
Part of the dissenting councillors’ argument was the news from a council- commissioned consultant audit that Queanbeyan is facing a challenging financial position ahead, and therefore is in no good position to take on Palerang Council’s infrastructure load or backlog.
The report says Queanbeyan is not putting enough aside for asset renewal under existing policies and that a large backlog (possibly $46 million by 2024) will cause pain in the future. Service cuts and increased rates and charges are discussed. Adding new assets like a new road is questioned.
“Good luck Palerang residents attaching to sinking ship that is Queanbeyan,” Councillor Kenrick Winchester noted wryly.
Behind a forced amalgamation between Queanbeyan and Palerang is the theory to strengthen the ‘regional centre’ of Queanbeyan, according to NSW documents. That is one context. But maintaining roads and other infrastructure in both jurisdictions are the chief challenges. Neither council wants to take on the others’ liabilities, but with a merger they will.
Queanbeyan councillor Judith Burfoot noted: “This is about councils not being funded adequately. NSW needs to address the infrastructure backlog. You can’t merge two councils and expect that will just take care of it.”
Consultants Percy Allan and Associates (who gave a public briefing in early April) say the outlook for a merged council using current data projections for the next 10 years “under continuation of existing policy conditions, is for trend deteriorations to unsustainable levels in both the operating balance and the infrastructure backlog.”
About Palerang alone the report says: “Under continuation of existing policy, the Council’s financial outlook is rated as financially sustainable with a minimal margin of comfort (but) the Council is confronted with a high and close to unsustainable infrastructure backlog.”
The report addresses the NSW government’s February announcement that it would freeze rates and rate variation ability for four years for merged councils (as well as staffing levels). It implies that Queanbeyan was hoping to benefit from Palerang’s previously proposed rate increases of 9.5% for five years (largely for infrastructure responsibilities).
But with a merger under the freeze conditions that would not be possible nor would making all the rates level with Queanbeyan’s. In that case, says the report, Queanbeyan’s “finances and infrastructure would markedly deteriorate over the four years to 2019/20 making it impossible to achieve financial sustainability without horrendous increases in fees and charges thereafter.”
Said Queanbeyan councillor Brian Brown at the council extraordinary meeting: “I don’t think I have ever heard an economist using such words.” Brown said he understood that Queanbeyan is currently “in a financial hole” and looking at a 20% real cut in services over 10 years as well as a 17-20% increase in rates, fees and charges without CPI or inflation.” That is partly due to an increasing population and without changing the way the council now does business.
However Mayor Tim Overall who is counting on what he believes will be a $30 million merger payoff by the state, responded that he is not happy about the “fearmongering” about rates and charges and that the $30 million would address Queanbeyan’s deferred maintenance issues.
Queanbeyan Council is not officially releasing the audit by Professor Percy until councillors have considered how to respond at council’s April meeting. However the Bulletin obtained a copy in the public interest as both councils make their final submissions on amalgamation by 8 April. There is the possibility that councils might be dismissed as early as the end of April at the Minister’s discretion.