Home' Plains Producer : Plains Producer June 4, 2014 Contents COUNTING THE COST OF FEDERAL CUTBACKS:
Plains Producer, Wednesday, June 4, 2014
manager Steve Jonas
explains the impacts to
A SLIGHTLY higher than expected rate
rise and reduced service levels are likely
impacts on councils from the recently an-
nounced Federal Budget, as fnancial of-
fcers fervently work behind the scenes to
accommodate drastic funding cuts.
Wakefeld Regional Council corporate
services manager, Steve Jonas, revealed
the loss of two quarterly instalments of
Financial Assistance Grants (FAG) and the
cutting of Supplementary Road Funding
will cost council about $350,000, or six per
cent, of its yearly income.
See the explanatory background stories
nearby to peruse that issue deeper.
The overarching result is council either
tries to recoup that lost income through other
sources or reduces its expenditure, through
reduced service levels and alternative sav-
Mr Jonas said council might have to
consider a mixture of both tightening the
belt and raising fees.
"We're looking at a mix of strategies for
consideration by council of maybe a slightly
higher rate, trying to cut expenditure and
raising some more income than we estimated
by increasing some user charges,” he said.
Options amongst those user charges to
rise could be cemetery or transfer station
fees, which are generally increased at the
rate of infation.
Road rental fees, which have not risen for
a number of years, could also rise. The FAG
payments and general rate revenue make up
a huge portion of council's yearly income.
"When grant funding is impacted, gen-
erally the only other area we have to go
back to if we want to recover that income,
is rates,” Mr Jonas said.
Recovering six per cent of council’s
income through rate revenue in one year
was not an option.
"It's just too much to add six per cent
on top of what council adopted last year in
the Long Term Financial Plan, so we’ve
got to look at a number of alternatives,”
Mr Jonas explained.
The bigger picture has always been trying
to get council back to surplus by 2019/20.
The recent Budget cuts mean council will
still aim to keep moving in that direction
but we may have to wait a little longer to
achieve the surplus goal.
“We’ve got to keep working to achieve
that goal,” Mr Jonas said.
Council will consider the measures it
can take to reduce the effect of the Federal
government decision of the funding losses
before endorsing its draft Annual Business
Plan for community consultation.
THE loss of government support through the
Supplementary Road Funding and two Financial
Assistance Grant instalments will leave a large hole
in council budgets across the state.
The Federal Government has been providing
councils with Financial Assistance Grants (FAGs)
since the 1970s. These grants are provided in four
quarterly instalments each year.
In both the 2008/09 and 2011/12 fnancial years,
the Federal Government, provided councils across
the nation with an extra FAG instalment in advance.
Wakefeld Regional Council corporate services
manager, Steve Jonas explained councils were oper-
ating with two FAG payments in advance than they
otherwise would have been.
“It is a lot of money that we were advanced
before, so that has helped us in the past,” he said.
“So our bank balance has been better over the
last few years than it would have been without the
"We count on getting four instalments each year
and we knew there would be a year that we would
only get two instalments but we didn’t know which
year it was going to be.
“We found out in the Budget it is this year.”
The FAG instalments council suddenly is not
going to receive total about $1.1 million, plus the
interest it would earn on that money.
On top of not receiving two instalments, when
the four quarterly FAG payments presumably re-
sume in the next fnancial year, the government will
not factor infation on top of them.
The Supplementary Road Funding program was
introduced in 2005/06, to help address inequity in
federal road funding allocated to South Australia.
The state has about 11 per cent of the nation’s
local road network but the formula used by the
Federal Government only provided about 5.5 per
cent of funding.
This was subsequently bolstered to about 7.9
per cent through the Supplementary Road Funding
initiative, when it was realised the state was signif-
That support was cut by the Federal Government
this year, which has resulted in a reduction of about
$250,000 to Wakefeld Regional Council’s annual
THE job at hand for Wakefeld Regional
Council’s management is by no means an
Already cash-strapped and working to-
wards returning council to a surplus, more
revenue raisers and savings now have to
be found within a Budget not overly laden
with fat to trim.
WRC accountant, Clive Hempel, has
been working hard to adjust council’s draft
annual Budget and Long Term Financial
Plans in light of the Federal Government's
decisions, before council’s consideration.
That said, WRC corporate services man-
ager, Steve Jonas, said it is a tough job but
it has to be done and council’s management
team are looking through the draft Budget
to see if there's any savings or increased
income that could be generated.
The Federal Budget, announced in May,
contained several key cuts to local councils
and caused a major rethink of council's
"We had the draft Budget ready to go
to the audit committee and council before
putting it to community consultation.
“We thought it looked on track with the
direction given by council in its Long Term
Financial Plan (LTFP) but now we’ve got
to revise it to a large degree.”
The $350,000 in lost revenue is a fair
hit (see separate story) and the fnancial
pain from this will probably be spread over
“We don’t think we will be able to recover
the $350,000 in one year,” Mr Jonas said,
given the burden on ratepayers would be
too much. “We don’t want to keep hitting
the ratepayers’pocket, so we need to look at
other measures than can reduce the defcit.”
This could require savings from council’s
expenditure, rises in user fees.
The LTFP does include an acceler-
ated road construction and maintenance
"To some degree it has to impact that
program (but) the savings we are looking at
in the Budget now to compensate for this,
won’t just come from roads,” Mr Jonas said.
“That’s the balancing act, if you haven’t
got the income and you start to reduce ex-
penditure, then you reduce service levels
in general terms.
"To increase service levels, you need
increased funding to do it. People want
better roads but there’s a limit to how much
you can increase rates as well.”
Rather than hitting ratepayers with huge
rate rises or drastically reducing its expendi-
ture, council will be considering trying to
maintain the current operating defcit for
the coming fnancial year, before heading
back on track towards a surplus.
Rates rise likely
Not much 'fat' to trim
Council has conducted three
The ceremonies were
conducted at Wakefeld
Regional Council chambers.
Mayor James Maitland
offciated at the ceremony
for Crisanto Catipon, from
Balaklava, who received
his citizenship certifcate on
Mr Karl Pelicano and
his children Kyle, Kristine
and Carlo, of Balaklava,
received their Citizenship
certifcates on April 28, in
a ceremony conducted by
WRC CEO Cate Arkinson.
Last Wednesday, May
28, saw Jie Chen of Port
Wakefeld, and Salvador
Gambol Salvador of
Balaklava, receive their
certifcates from Mayor
ABOVE: Jie Chen, mayor
James Maitland and
ABOVE LEFT: CEO, Cate
Atkinson, with the Pelicano
family, Kristine, Kyle, and
Karl, holding Carlo.
LEFT: Crisanto Catipon is
congratulated by mayor
WELCOME TO OUR NEW CITIZENS
Links Archive Plains Producer May 28, 2014 Plains Producer June 12, 2014 Navigation Previous Page Next Page