The South Australian Local Government Association’s 2005 Independent Inquiry into Financial Sustainability in South Australia was a first for Australian Local Government. This statewide inquiry investigated and made recommendations on the long term financial viability of Councils and since has led to other State Associations running their own similar inquiries.
At the national level, the Australian Local Government Association is also looking at the national issues impacting on the financial sustainability of Councils.
South Australia’s inquiry was undertaken by a three member board comprising former senior State public servant, Bill Cossey (Chair); former Chief Executive of a leading law firm, Juliet Brown; and former CEO of the AFL, Wayne Jackson. It released its report and recommendations in August 2005. Its key finding was that the majority of South Australian Councils do not have the revenue to meet infrastructure renewal and replacement costs and, as such have put the needs of communities ahead of their own financial sustainability.
With many Councils struggling under major infrastructure backlogs compounded by cost shifting and falling funding from other spheres of government, the LGA and its Council members accepted the Inquiry’s view that current financial governance frameworks are simply not up to the task. As a result, the LGA organised eight regional forums in February and March 2006 to explain the challenges in plain English and to consult on key issues such as a formal definition of financial sustainability.
“The LGA believes it is crucial that all staff, particularly those not directly involved in financial management, and elected members have a clear understanding of the issues faced by Councils to ensure there is better community understanding of the challenges faced by their Councils,” said Wendy Campana, Executive Director of LGA.
She said the forums highlighted that most communities, through their Councils, were “not paying their way” but rather they were living off their assets, and “would hand infrastructure to the next generation in a mess” unless policies were changed.
As result of the consultation with elected members and Council staff, in March the LGA adopted its definition of financial sustainability as: “A Council’s long term financial performance and position is sustainable where planned long term service and infrastructure levels and standards are met without unplanned increases in rates or disruptive cuts to services.”
LGA President, Mayor John Rich, said this definition was important as a common foundation for development of various financial governance and management supports.
The LGA has now put in place its Financial Sustainability Program. Under this program the LGA:
- has established a Financial Sustainability Advisory Committee
- is finalising and publishing a series of information papers
- has finalised a Council and CEO Checklist to assist Councils and as a mechanism to survey Council progress
- is implementing projects designed to assist Councils with long term financial planning and with infrastructure and asset management planning
- is developing training and briefing programs to further assist Councils
- is working with other governments on intergovernment issues.
