Savings needed says councillor as Burnside’s debt to peak at $20.5m

Burnside Council’s total debt is expected to peak at $20.5 million next financial year, as one elected member called for improved savings targets.

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BURNSIDE Council’s total debt is expected to peak at $20.5 million next financial year.

Responding to a question from a resident last month, chief executive officer Paul Deb said large borrowings to fund new capital projects had increased projected debt levels.

The council’s current debt forecast for June 1, 2019, is $17.5 million.

Big projects, such as the $6.8 million Magill Village development and the new depot at Conynham St, are behind the rise in debt, Mr Deb said.

“However, it is important to note that these figures are estimates only and debt will be influenced by decisions made at council.

“Council policy is to use any surplus to pay back loans.”

But one council member immediately voiced alarm.

Cr Lillian Henschke said Burnside’s residents were edgy about increasing debt, and the council needed to improve its savings performance.

“Some people are uncomfortable about the council taking on more debt,” Cr Henschke said.

“We need them to feel we’re efficient and effective and saving money.

“We need to increase debt for the right reasons, and not perceived as wasting money.

“It looks like more and more debt is going to asset renewal and we aren’t saving for this.

“Before we raise the debt higher, I want to make sure we are lean, not taking a chequebook approach.”

Burnside Council, which has held a number of confidential meetings in 2019, says it has a plan to scale back its increasing debt. Picture: Supplied.

Mr Deb said the council aimed to pay back $300,000 this financial year.

Cr Henschke also had concerns with the council’s subsidiaries, such as ERA Water — a water harvesting project shared with two other councils that might need to borrow a further $2.3 million to stay afloat.

“I’m not confident it will achieve the benefits it sets out to achieve,” she said.

“I’m uncomfortable with the ERA Water project.”

When asked by the Eastern Courier Messenger about debt reduction, the council referred to a statement by the Local Government Finance Authority

“Looking at a council’s level of debt in isolation is a poor way to judge its overall financial performance and long-term viability,” the statement read.

“Debt is a renewable resource and is an effective financial tool that can be used by councils, when required.

“Councils should not be afraid of debt, they should embrace its responsible use.”

The council borrowed a further $3.6 million in September last year, with $1.6 million going towards the roll-out of new LED lights.

Mr Deb could not say when it hoped to clear its total debt.