A New South Wales local council has been told to give its councillors basic financial training after a report found it had mismanaged its budget and had a history of overspending.
Key points:
- The report found large gaps between council budgets and what was actually spent
- The council was formed in 2016 as part of forced amalgamations across NSW
- Mayor Charlie Sheahan says the report recommendations are being implemented
An independent report completed for the Cootamundra-Gundagai Regional Council (CGRC) made 17 recommendations to improve the organisation's monetary position.
It also identified large gaps between budgets the council agreed upon and how much money was actually spent.
Over the five years to June 2021, total spending had exceeded the council's original adopted budget by $15.8 million.
CGRC was formed in 2016 as part of the state government's forced amalgamations of local councils.
"The council's inability to achieve budget expectations since the merger has significantly impacted on available funding for future capital works and reserves," the Finch Consulting report said.
"It is apparent that budgetary control over the merger grants and other project expenditure was inadequate."
The upgrade of Gundagai's sewage treatment plant was one project identified that exceeded budget expectations.
It blew out by more than $6 million, requiring the council to borrow $4 million to cover the cost.
'Unflattering' report welcomed
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 provides us with a lot of good recommendations," he said.
"We'll certainly be adopting some immediately and some are already in place."
Mr Sheahan said he had asked the general manager to freeze plant and fleet replacement and that there were plans to review all of the council's assets.
He said councillors had been aware of overspending and a financial deficit for years but they did not realise how bad it was.
"In the past we probably were flying a little bit blind but that's all because it was a whole new organisation that we were dealing with," Mr Sheahan said.
"The proper structures had not been put in place initially."
But Mr Sheahan admitted that while the merger had complicated finances, it could not be held solely responsible for the council's financial troubles.
"It's an organisation of its own identity like any business, the same principles apply," he said.
"You've got to work the budget between revenue and expenditure."
Mr Sheahan said the council would be restricted in terms of delivering projects but that day-to-day service delivery would not be impacted.
Financial outlook
Speaking at the council's meeting on Tuesday night, consultant Bob Finch detailed the report and touched on his recommendations.
He recommended CGRC review its operating budget and revisit its long-term financial plan to ensure financial sustainability.
The report also recommended the council consider introducing a basic financial training program for councillors.
Mr Finch said he was confident that moving forward the council had a good enough team to respond to the financial issues.
"They're aware of the issues and I'm sure that they'll be putting appropriate action in place to fix some of the issues," he said.
Finch Consulting conducted a review of the Wingecarribee Shire Council before it went into administration last year.
Mr Sheahan said he was confident there were no plans to place CGRC into administration.
"I don't think there's a real appetite for government to put councils under administration, provided we can convince them we're on top of it and we have a way forward," he said.