A local council in New South Wales has been asked to give its councilors basic financial training after a report revealed it mismanaged its budget and had a history of overspending.
- The report found significant discrepancies between council budgets and what was actually spent
- The council was formed in 2016 as part of forced mergers across NSW
- Mayor Charlie Sheahan says report recommendations are being implemented
An independent report carried out for the Cootamundra-Gundagai Regional Council (CGRC) made 17 recommendations to improve the monetary situation of the organization.
He also identified significant discrepancies between the budgets agreed to by the board and the amount actually spent.
In the five years to June 2021, total expenditures exceeded the budget originally adopted by the board by $15.8 million.
The CGRC was formed in 2016 as part of the forced mergers of local councils by the state government.
“The board’s inability to meet budget expectations since the merger has had a significant impact on the funding available for future capital works and reserves,” Finch Consulting’s report said.
The upgrade of the Gundagai sewage treatment plant was an identified project that exceeded budget expectations.
He blew over $6 million, forcing the council to borrow $4 million to cover the cost.
A well-received “unflattering” report
CGRC Mayor Charlie Sheahan welcomed the report but said it was “unflattering”.
“It certainly gives us a good understanding [of] where we are and it also gives us a lot of good recommendations,” he said.
“We will certainly adopt some immediately and some are already in place.”
Mr Sheahan said he had asked the chief executive to freeze plant and fleet replacement and that there were plans to review all council assets.
He said councilors had been aware of the overspending and financial shortfall for years, but did not realize how serious it was.
“In the past, we were probably flying a bit blind, but that’s all because we were dealing with a whole new organization,” Mr Sheahan said.
But Mr Sheahan admitted that while the merger had complicated finances, she could not be held solely responsible for the council’s financial problems.
“It’s an organization that has its own identity, like any business, the same principles apply,” he said.
“You have to work the budget between income and expenditure.”
Mr Sheahan said the council would be limited in terms of delivering projects, but day-to-day service delivery would not be affected.
Speaking at the board meeting on Tuesday evening, consultant Bob Finch detailed the report and discussed its recommendations.
He recommended that the RMCC review its operating budget and revise its long-term financial plan to ensure financial sustainability.
The report also recommended that the board consider introducing a basic financial education program for advisers.
Mr Finch said he was confident that going forward the council had a good enough team to respond to financial issues.
Finch Consulting conducted a review of the Wingecarribee Shire Council before it took office last year.
Mr Sheahan said he was confident there were no plans to put the CGRC into administration.
“I don’t think the government really wants to put the councils into administration, provided we can convince them that we are on top and that we have a way forward,” he said.