‘We can’t keep putting upward pressure on rates’: SDRC nears precipice of $1b ageing infrastructure cliff

‘There is some pain ahead and I’m not going to sugarcoat it’: Mayor Vic Pennisi warns the looming assets crisis could hit ratepayers hard as the deadline for SDRC’s 2021-22 budget approaches.

Roads are just one of the hundreds of assets Southern Downs Regional Council fears need urgent replacements. Picture: Luka Kauzlaric / staff

Nearly $1 billion in ageing infrastructure and assets remains Southern Downs Regional Council’s gravest financial concern as the deadline for the 2021-22 budget rapidly approaches.

The council’s third quarter budget review was tabled at Wednesday’s ordinary meeting, with a report revealing the organisation’s operating budget surplus had increased from $72,000 to $277,000 since the last review in February.

This rise was met with a $3.4 million decrease in the council’s net result from both operating and capital balances, which was driven by a reduction in Queensland Reconstruction Authority funding for the 2020 floods after the March rain event.

The report also stated SDRC’s cash at bank and investments remained in a “position of strength” with $67.2 million.

A SDRC finance officer told councillors on Wednesday an underlying deficit of about $2 million remained in the 2020-21 budget, despite the increased operating surplus.

He said the big ticket items in council spending included more than $800,000 in asset depreciation and another $478,000 in emergency flood recovery, though was hopeful some of that money would be recouped in grants.

Sewage leaked into Bracker Creek near the McEvoy Street pump station last week due to a burst pipe.

With another sewage leak at a Warwick pump station last week highlighting the region’s failing infrastructure, Mayor Vic Pennisi urged residents to “look at the bigger picture” rather than the council’s bottom line.

“We’ll maintain pretty much a break-even budget I would suspect, but I can tell you with the ageing infrastructure it is impossible to continue to save when we have so much to spend on (it),” Cr Pennisi said.

“There was a big focus on debt and that you’re sustainable if you haven’t got any debt … (but) the ratio we’ve failed on for many years is the replacement of infrastructure fund.

“We’ve had to find (about) an extra $850,000 to fund the new capital depreciation on infrastructure we’ve been putting in the region, but it’s new money and it’s money that’s got to come from ratepayers.”

Cr Pennisi said the region would likely need to find $30 million in the next three years to repair critical sewage networks alone, which was why he’d previously advocated for low-cost options in the Warwick Saleyards and Stanthorpe Art Gallery upgrades.

“Our debt is very manageable at around $19 or $20 million, but we have almost $1 billion worth of assets we have to maintain and that’s our biggest challenge,” he said.

“To be able to do that at the rate required by the government, we need to find more money and we can’t keep putting upward pressure on rates, we need to put downward pressure on rates.

“There is some pain ahead and I’m not going to sugarcoat it. That doesn’t mean we won’t overcome those challenges, but there will be some challenges.”

SDRC has not indicated when a draft 2021-22 budget will be released for community consultation.