Measuring our financial healthNovember 17, 2022
The Municipal Association of Victoria (MAV), in partnership with FinPro, and in collaboration with our members and State Government, has developed a dataset that can be used to demonstrate the financial sustainability of Victorian councils.
This project, which was recently discussed with our members at the FinPro conference. Again, thanks to all of you who have been instrumental in providing the data which enables the analysis.
The report aims to create a better understanding of financials within the sector and externally, the data identified four serious risks to sustainability that require immediate action:
- Deteriorating underlying surplus across local government
- A significant asset renewal gap
- The compounding effect of a rate cap which has consistently been set below the cost increases experienced by councils – FinPro continues to call for a full review of the rate cap mechanism
- A limited and reducing unrestricted cash position of many councils
As finance professions in the local government, we have always acknowledged that there is room to improve practice within the sector, but many of the challenges faced by councils are driven by external factors or have significant constraints imposed on us by other levels of government. It is fair to say that there are now financial challenges being faced by all Councils that need to be reviewed, and the status quo cannot continue.
This is compounded by a relatively poor understanding of council operations, asset management and finance among parliamentarians, departments, and agencies and there is a great need for a greater understanding of the financial challenges faced by us by our State and Federal Government . This challenge has been felt by many of our members and has been the topic of discussion within our regional groups and also a theme which has resonated though our other forums. The changes in inflation and construction costs subsequent to this report’s data set will exacerbate all of the issues raised.
We join with the MAV in advocating for a more nuanced consideration of the impacts on councils and their local communities in their policy development, and for governments to work with us on solutions.
I encourage you to read the full report.
We would welcome any comments you may have. Please feel free to send these through and of course please make contact through Gab ([email protected]) for further information.