A report into the accounts of 68 Queensland local governments by Auditor General Andrew Greaves has revealed the extent of financial challenges faced by councils.
Local Government Association of Queensland (LGAQ) Chief Executive Greg Hallam said the report into the financial statements of councils and their associated entities for 2011-12 backed up the LGAQ’s view that financial sustainability would be a key challenge for its members in the coming years.
A series of decisions by the previous Labor government, including the withdrawal of state government subsidies, were blamed for forcing an increase in local government borrowing in order to maintain services to local communities.
“Those decisions have caused councils to lose about $850 million in revenue each year.
“For many councils that has meant a choice between maintaining services and infrastructure through borrowing and increased rates, or cutting back on services.”
Mr Hallam said many councils were trying to operate more efficiently by reducing their labour costs while encouraging economic growth in their regions through programs to fast track building development approvals.
He said the State Government should acknowledge the work councils were doing to encourage development as it negotiated reforms to the State’s infrastructure charges regime.
“What is definitely not needed in this climate is a move to further force councils to subsidise residential and commercial development by reducing their ability to ensure the property industry pays its fair share of infrastructure costs,” he said.
The Auditor-General’s report found that 16 of the 68 councils audited were at higher risk of becoming financially unsustainable, largely because they had recorded operating losses over the last three years.
However, the report found that as a whole the local government sector had a low financial sustainability risk.
The report said “community assets are being constructed, acquired, renewed and replaced faster than the total asset base is being depreciated.”
