Council receives moderate assessment from Treasury

23 April, 2013Posted in: Other
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Wingecarribee Shire Mayor Councillor Juliet Arkwright has responded to the findings released in last week’s NSW State Government Treasury Corporation report into the financial stability of the state’s councils.

“Viewed in its entirety, the report contains numerous positives for our Council and Shire in general,” Councillor Arkwright said.

The report, released on Friday 19 April by the Minister for Local Government, the Hon Don Page MP, and the Treasurer, the Hon Mike Baird MP, reviewed the financial viability of the state’s 152 councils.

The report rated Wingecarribee Shire Council with a Financial Stability Rating (FSR) of Moderate and a Neutral Outlook.

Achieving a Moderate level FSR is considered to be the base target level for councils.

As per the report a Moderate FSR rating means:

  • A local government with an adequate capacity to meet its financial commitments in the short to medium term and an acceptable capacity in the long term.
  • While it has some record of reporting minor to moderate operating deficits the local government may also have recently reported a significant operating deficit.
  • It is likely able to address its operating deficits, manage unforeseen financial shocks and any adverse changes in its business, with moderate revenue and/or expense adjustments. The expense adjustments are likely to result in a number of changes to the range of and/or quality of services offered.
  • Its capacity to manage core business risks is moderate.

A Neutral Outlook means:

  • There are no known foreseeable events that would have a direct impact on the financial sustainability of the local government.
  • It may be possible for a rating upgrade or downgrade to occur from a neutral outlook, if warranted by an event or circumstance.

Of the 152 councils, 74 per cent were currently rated Moderate or better, whilst almost half – 49 per cent – obtained a Neutral outlook.

“34 councils achieved a higher FSR ranking than us and only five achieved a higher, or Positive, outlook,” Councillor Arkwright and Chair of Council’s Finance Committee said. “When compared with our neighbouring councils, only Upper Lachlan Shire Council rated higher with a Sound FSR.”

“Council will now take the recommendations from the report and look at implementing the findings.

“What is encouraging is that Council has already begun implementing some of their suggestions, most notably, the prioritisation of asset management planning.

“We must however focus on some of their other findings which include the possibility of increased use of debt, clearer medium term pricing paths and improved use of restricted funds.

“When viewed on the back of recent financial developments, most notably the reimbursement of some of our CDO investments, the rating may be viewed somewhat more optimistically,” Councillor Arkwright added.

“However, whilst the results are encouraging, there are obvious areas for improvement.”