Our funding shortfall
Our funding shortfall has come about due to a range of decisions which were made about the reconstruction of buildings and other structures following the 2009 Bushfires. You will recall the amazing generosity of the Australian people and both State and Federal governments at that time. This generosity translated into Shire-wide reconstruction activity following the fires, which resulted in a range of new, expanded and replacement assets (buildings, halls, community centres, sporting facilities, trails, bridges and park facilities).
Then, in 2011-12, the responsibility for managing, insuring, maintaining and renewing these assets (worth $33 million) was transferred all in one go to Murrindindi Shire Council.
The cost of managing our assets before the fires was $1.04 million per annum; the cost of managing our assets now including these new and expanded assets is $2.8 million per annum. This leaves us with additional costs per annum of $1.76 million which is currently unfunded - a pretty hefty bill for a small rural Council, we think you’ll agree.
We have had access to a number of grants and funding sources from government, but none addresses this fundamental issue.
We have been appealing to the Victorian Government for the past six years to recognise the unintended consequences for our community of the transfer of these assets to Council’s management but did not receive assistance which address the issue.
In June 2014 Council was advised by the then Minister for Local Government that there would be no further assistance for council in relation to the gifted assets.
In response to the Minister’s advice, Council then wrote to ratepayers in August 2014 to talk to them about a number of funding options(DOCX, 263KB). Council was considering to overcome this problem and ask for the community's input on those options. View the Mayor's letter to ratepayers(PDF, 197KB) .
We’d like to thank everyone who contributed feedback on the options we are considering to help manage the funding shortfall. We received over 150 responses from the community, via email, online forms, phone calls, letters, Facebook comments and letters to the media. It was heartening to see the level of engagement on this issue and we received some well considered and thought out responses. The views expressed will certainly have a bearing on which option or options Council will focus on to address the funding shortfall.
There was a clear preference expressed to avoid a substantial increase in residential rates. We are making every effort to keep rate increases to no more than 6%, as Council has previously committed to do. Our specific focus is looking at the options of land sales and at reviewing existing management arrangements and responsibilities for our public facilities, as these actions received the strongest preference from the feedback received.
Where to from here
Council considered the community feedback and in March 2015 resolved that it would pursue five areas of activity.
- Consideration of new differential rating categories. Council has adopted a new Rating Strategy.
- Reduction of financial support for a range of assets by transferring support for those assets for which Council has not responsibility to their own responsible body, and the sale of appropriate assets.Discussions have been commenced with State Government officers with the objective of having the State Government take over the levels of support currently provided by Council or funding Council for these activities.
- Engaging with community groups and committees to transfer responsibility for managing and maintaining community assets providing the community with a greater say in how these assets are managed into the future. Council will be engaging with local communities and committees of management to seek their increased contribution to the management of community facilities. This contribution will need to be based upon the capacity of these community organisations as well as the benefits that accrue to the primary users of community facilities.
- Developing a policy on asset renewal which identifies the extent that assets will be renewed.Asset renewal will be committed at an appropriate level rather than the current 100% projected in Council’s Asset Management Plans.
- Continuing to deliver improvement in Council operations.Council will continue to review its operations to achieve efficiencies and limit its cost increases.
Despite these approaches to reduce costs, there is still a significant impost upon Council from these new assets. As a result Council has made an application to the Essential Services Commission for a variation from the Rate Cap which has been introduced by the State Government for the 2016-2017 budget.