Mayor column: with Cr John Harvie

Published on 21 November 2024

The financial sustainability of local councils in NSW is a major concern and a challenge for Murray River Council.

Financial reports and statements are often long and complicated to understand. So, in this column, I am going to try to paint a picture for you, in simple terms, about council’s current financial position.

Council’s finances are not much different to your own household finances.

At the end of September this year council had $58.6 million in the bank. That seems like a lot of money, however, about $37 million of that is held in our Water ($9m), Sewer ($22m) and Waste ($6m) funds. These funds can only be used to upgrade our ageing water and sewer facilities and ensure our landfills meet current regulations.

That leaves us with $21m in the bank for other uses. Of that, $19m is restricted grant funding, meaning it can only be used for the specific purpose for which we have received that money, leaving just over $2m in the bank for general operations.

Like most households we have income and in council’s case our income comes from rates, charges and fees, which come from our ratepayers and residents and grant funding from state and federal governments. For a household, funding may come from wages, earnings from a business, or investments, all of which enable you to pay (household) expenses.

If there are any funds left over after paying (household) expenses, we can do a bit of upkeep on the family home or buy items that will make our lives easier or make our home a nicer place to live. We can also save that money to do a home renovation or add an extra bedroom as our family grows. Likewise for council.

Our budgeted Operational Income for this financial year is $59.5m. Our expenses are around $48.5m, which leaves a Cash Surplus of $11m.

The big challenge facing all councils is that council owns assets like buildings, infrastructure, and over 1600km of streets and roads, valued at around $1billion.

Council is required to allocate around $20 million each year to maintain, upgrade, or replace these assets.

Having only $11million to do that work, we need to find another $9million (Operating Deficit).

Operating deficits are not sustainable, no different to a household budget.

Council will soon have to develop a solution which will likely include increasing productivity, increasing income, cutting costs or disposing of surplus assets.

The solution is likely to be a combination of these options and one which we will present to community members for feedback, before implementation.