Minutes of the ordinary Council meeting - 25 September 2012

That Council not undertake lobbying on this matter.
RECOMMENDATION IMPLICATIONS
Environmental, Social, Policy or Statutory: Nil.
Economic (Financial): There will be an impact on the current year‟s budget of
approximately $200,000.
REPORT DETAILS
Each year the amount of Financial Assistance Grant (FAG) is calculated based on a
number of factors. Within these factors an estimation of the Consumer Price Index
(CPI) is included. The initial assessment of the CPI made last year varied from the
final indicator and this meant that the increase for this year is offset by a reduction
for the amount overpaid last year.
In addition, the FAG is based on population. New population figures are available
and this has shown that the population balance between New South Wales and the
other states has changed. This impacts on overall amount of the funding pool that
is allocated to New South Wales, which in turn reduces the amount available to
each council within New South Wales.
There has been no information provided to show that the method of calculating the
allocations has changed. In previous periods councils have benefitted from the
actual CPI being higher than previously forecast and the resultant benefit to the
budget bottom line.
The Local Government and Shires Association is arguing for:
1) the Commonwealth Government agreeing not to recoup the overpayment, as it
is a small amount in their budget, or failing that;
2) deferring the recoupment until the following year.
While, initially, it would seem logical to argue to keep the funding, by doing so local
government creates the following situation:
1) It appears to want everything its own way – When we have received above
expected funding we are quite happy to keep the funds and make no noise
about it, but if things turn around we start to complain.
2) We undermine any chance of other levels of government agreeing to a
wealth tax to support local government – We are sending the strong
message that as an industry we are not mature enough to budget for the
uncertainty that growth taxes come with. It is unlikely that other levels of
government would agree to changing the funding arrangement when their
experience with local government is the moment things get grim we will be
looking for more handouts.
3) Indicate that we are poor financial managers – Any good business should be
setting itself up to absorb financial shocks. Other than rates and annual
charges, all income streams are subject to variability. By claiming that we
cannot adjust within this year to an adjustment such as this (in our case a
negative change of 0.5% in annual revenue) indicates that we are either
poor financial managers or financially unsound.
The impact of the changes in the level of FAG does impact on the ability of the
Council to provide services, but this is considered simply a reality of life. All other
levels of government are seeing significant reductions in the level of available funds
Kempsey Shire Council FULL TEXT Minutes Ordinary Meeting 25 September 2012 Page 83