Time to answer $11.5m shortfall
RICHMOND Valley Council will reveal the details of its $11.5 million loss last financial year at tomorrow’s November meeting. Dedicated council watcher Ian Drinkwater, a candidate at the last election, said the document provided ‘more questions than answers’.
“The council’s overall operating loss is $11.5 million. How will we ever rein that back in?” the practising public accountant asked.
“If you want to be brutal and crass about it these figures mean, ultimately, increased rates for reduced services.”
Among the losses last financial year were $2.2 million in bad investments, with the auditor noting that for another $3.3 million of investments there was insufficient information available to place a value on them for 2009.
This loss can be added to the $3.6 million lost in 2008 – a total of $5.8 million in two years.
A legal bill of close to $600,000, resulting from the closure of the decade-long high court battle involving the Iron Gates development, also contributed to the loss.
So too did a $780,000 write down on the council’s bridge and pre-stressing business.
Mr Drinkwater’s comments are somewhat echoed by the council’s own financial manager, James Brickley, who reported to the council in its October report.
“It is even more clear that the current revenue base of council cannot support the operation of the council and provide funding for future infrastructure replacement, let alone expansion,” Mr Brickley reported.
“What this demonstrates is the current generation are not paying their way and future generations will have to cover the cost eventually. It also demonstrates council and the community cannot afford to maintain its infrastructure.”
A new directive from the State Government has demanded local councils revalue their roads, bridges and treatment works so that their depreciation reflected the true cost of replacing them.
As a result this added, on paper, $52 million to the balance sheet whilst depreciation of assets increased by $2.8 million, adding to the negative bottom line.
Even so, compared with the year before when Richmond Valley Council lost $5m, the local government body is accumulating losses and is going out the door backwards.
“This is nothing new,” Mr Brickley said, quoting independent auditors Fiscal Star as previously saying Richmond Valley was not financially sustainable based on its rating income and its huge infrastructure maintenance bill.
Lismore, Ballina, Tweed and Coffs Harbour are rated the same.
“A lot of rural councils with a lot of infrastructure and low population bases will have losses like this,” he said.
In fact, a rate rise of 38 per cent would not even cover the amount needed to bring local roads up to scratch, he said.