SHOCKING: Hartwig exposes raw truth of council coffers
NEW Gympie region Mayor Glen Hartwig has painted a dismal position of the council books; estimating Gympie council will have to spend between $40-50 million to get the region back to the "minimum standard".
This includes between $10-12 million to cover council staff wages and $30 million to get Gympie's road network up to scratch.
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In 2014, Gympie Council had the number one rating for financial stability in Queensland with $93.5 million in reserves, Mr Hartwig said in a detailed summary he posted on his official Facebook page yesterday.
He said the current council has inherited not only no money, "but less than no money" and will be forced to cut millions in projects from the current financial year to avoid rate spikes and more borrowing.
"This council has very difficult decisions to make," he said.
"Tough, painful, unpalatable decisions that if avoided will cause the entire region to suffer large rate rises for years to come."
Read Mr Hartwig's full "synopsis of our situation" below:
AS RATE payers, it is important to be aware of the condition of your council. It would be fair to say it doesn't look good, in fact it's pretty dismal!
The recent CPA report has shown the rate payer that there is serious systemic problems in our council around financial intelligence and accountability, risk management and project costings and administration. I recommend you read the report, it is on councils website. The current financial position of the council is a direct result of the failure to have adequate standards and controls around finance.
What that means for this council is that there are very few options when dealing with this budget. In the 2014 annual report, the Gympie Regional Council had $93.5 million in reserves. Some of that money was constrained funds which means it can only be spent on particular things but nonetheless, it is a considerable amount of money which gave the GRC the number one rating for financial sustainability in QLD, top of the pile.
In comparison, this year council will borrow 10-12 million in the form of an overdraft to meet staff wages and other expense commitments until September 2020. There is no money, in fact there is less than none and we have to borrow money to pay our staff. Constrained funds cannot be used to pay wages. This is after we have cut millions in projects from this current financial year to limit the amount we need to borrow. I hope the rate payer understands the difficult predicament your council is in. Council gets paid twice each year and we do not have enough money to make it until the next payday. To put it simply if you earn $50k per year and spend $60k how long before you are have to sell your kidney?
We have inherited Mother Hubbards Cupboard and the nursery rhyme is correct, there is nothing in it.
I can hear you say but we have been told everything is OK there is plenty of money. In my opinion you were misled, deceived. For the last three years, I have consistently maintained my view that councils spending was excessive.
Council could continue to ignore the risk management failures, pretend everything is OK, make a few minor changes but convince you that all is well and hit you with a 20 % rate rise to cover the unnecessary costs that council has had for the last years. Yes that includes rural rate payers who have seen their rates go up by 60% and more over the last four years.
Or council could take our responsibilities seriously, begin to address the systemic issues that we are faced with, apply some financial accountability and literacy to this budget process and make some of the necessary changes that will start to correct the gross failings of previous years. This approach is painful, it means cutbacks, it means the shiny stuff that council used to do will no longer be done.
Of course we cannot delay the inevitable and ignore the failures of the past. If you take the soft option this year you still have to address the systemic issues and over spending at some point, unless the rate payer is prepared to have large rate rises each and every year. The pain will come and the longer you leave it to fester the larger the sore will be.
To add to the issues this current council face, in the past general maintenance was seen as an option not a necessity. What this means is that generally in the past councils bitumen resealing program was centred around resealing a road every 15 years depending on usage. Based on the program of the last years councils, the program now runs at 26 years. Have you noticed more potholes? This is why and to repair those potholes is very expensive. General maintenance actually saves you money in the long run. Try driving your car for 100 000 km without servicing it, let me know how it goes for you.
For those in rural areas who drive gravel roads you will see that there is little gravel. Once again there has been a failure to do adequate minimum standard maintenance.
What does this mean for your organisation. Council could spend $30 million tomorrow on our road network, not to gold plate it but to get it back to where it should be. This is money we don't have. The longer we fail to address this, the worse the scenario gets. This council understands the important of maintenance.
This is not an isolated example. Many of our core business responsibilities have been neglected. We potentially need another 5-10 million to repair and maintain other assets.
When we add up the 10-12 mil loan to pay staff and expenses, 30 mil on roads and 5-10 mil, you can see that this council is starting from a position of 40-50 million in the hole. That is not gold plating but getting things back to the minimum standard.
This council has very difficult decisions to make. Tough, painful, unpalatable decisions that if avoided will cause the entire region to suffer large rate rises for years to come.
I can assure you that NO councillor is enjoying this budget process however NO councillor is shying away from the gravity of the financial position of the organisation and the acknowledgment that there is an unequivocal need to make positive changes to restore councils financial accountability and intelligence.
The issues we are dealing with are not Covid driven. Covid cannot be blamed. Covid makes it worse but the core of the problem is systemic failures in risk management, financial management and accountability.
There is no quick fix or bandaid solution, unfortunately it will take years clean up this mess. However, your council is working hard to address these issues and move council into a more sustainable position.