YOUR VOICE -YOUR CHOICE
How Council 'Fixed the Books' And Not The Roads
It has been discovered that Port Macquarie Hastings Council have reduced their road infrastructure backlog by a staggering $133.7 million in the 2014/15 financial year all without so much as filling in a pothole.
With such an incredible feat there was no announcement by Council to the Community about this momentous achievement.
So why Council would keep such a thing quiet is a mystery, or is it?
In Port Macquarie Hastings Council Fit for the Future submission to IPART in June 2015, Council drastically reduced the road infrastructure backlog from $225 million to just over $91 million resulting in the $133.7 million write-off in order to appear ‘Fit’.
Council ‘Special Schedule 7’ documents show that the road infrastructure backlog was steadily increasing each year with reported figures of 2012/13 being $187.781 million, 2013/14 figures showing a backlog of $225.089 million and 2014/15 sharply decreasing to $91.382 million.
Brian Dollery, a professor of local government at University of New England who specialises in Council finances was reported as saying that the figures were an “accounting fiction” designed to make councils appear more financially viable. (Sydney Morning Herald, 22nd June 2015: Sydney councils shift $1 billion repair bill with accounting ‘fiction’ in Fit for the Future scramble).
In the same SMH article Local Government Minister, Paul Toole said he was “concerned by any suggestion councils had not been scrupulous, honest and transparent in the information they are providing (the state government)”.
When asked to comment on the $133.7 million reduction to the road infrastructure backlog when just over $15 million was budgeted to be spent on roads, the General Manager responded “This work involved the realignment of asset condition rating to better meet community expectation and in doing so highlighted the difference between a technical backlog figure and one which was more relevant to asset users”.
The General Manager’s comment is simplified in IPART’s assessment which states “The Council changed its asset condition assessment methodology to a risk based approach. This led a significant improvement in the backlog ratio from 2013/14 to 2014/15.”
This statement by IPART was also addressed as a risk to Council by their own consultants, the AEC group who identified that council should appropriately consider the potential future implications of the alternative depreciation method in terms of the incidence of costs on ratepayers and the extent of which charges may be ‘back-ended’, potentially placing greater pressure on future communities.