Bass Coast Council in serious financial trouble, according councillor Les Larke

A Bass Coast councillor, who is also an accountant, is calling for an overhaul of the council’s financial management.

Bass Coast Council’s performance is in the spotlight after their annual report was tabled on Wednesday, exposing rising debt, dropping community satisfaction, and a plethora of expensive projects.

The annual report provides data and analysis on the council’s performance over the past year.

Take a look at the takeaways from the council’s annual report.

Spending and projects

Despite boasting a budget surplus of $23.9m — a rise of about $3m from last year — a councillor is concerned the council is on a downward trajectory.

Accountant by trade, Les Larke said this “surplus” included capital grants and non-monetary contributions from developers like roads and footpaths.

“Those things aren’t going to improve finances, they are just a book entry,” he said.

“If you exclude those things there will be a deficit.”

Councillor Les Larke

Bass Coast Council racked up a further $1.7m in debt from loans this year.

During a special council meeting on Wednesday to discuss the release of council’s annual report, Cr Larke said he was concerned about the council’s financial position.

“Management of the council’s finances is less than optimal and requires an urgent and significant overhaul,” he said.

“All roads lead to increased borrowings. It is evident in the report, driven by ongoing underlying operating deficits through lack of reform of the operating budget limiting council’s capability to fund projects from its own internal sources.”

He said the surplus mentioned was not an “operating surplus”.

“If you don’t have a good operating surplus, you don’t have funds to fund projects from your own funds,” he said.

“What I have argued is there needs to be a reform of operations to generate profits rather than borrowing more.”

Council delivered a record capital works program of $34.9m in 2021/22, delivering 118 projects.

This almost doubles the $18.3m delivered in the previous financial year.

$8.6m was spent on road works, $9.9m was spent on building improvements like the Cowes Cultural Centre and Newhaven Soccer Pavilion, land improvements cost a total of $9.4m and were made to areas like the Rhyll Boat Ramp and Jetty, Cowes East Foreshore Rock Revetment Wall, and Wonthaggi Guide Park.

The annual financial report showed Bass Coast Council was in the “medium risk” zone for being able to finance capital works from their own income streams, without the reliance on grants.

“This debt increase and every extra dollar of interest in times of increasing interest rates will also impact council’s future capabilities to effectively deliver essential services and infrastructure projects and will adversely impact our residents and ratepayers cost of living standards,” Cr Larke said.

Many projects have gone over budget including the Cowes Cultural Centre development.

Bass Coast Council had a budgeted expenditure of $83.1m for this year, the actual expenditure was $92.6m.

Almost 40 per cent of expenditure was on employee benefits, while 35 per cent was on materials and services.

A number of unbudgeted events over 2021/22 contributed to the $5m increase in the total expenditure.

These include the gifting of Council library assets to a new not-for-profit organisation MYLI, additional waste related expenditure and development planning expenditure, and costs associated with the termination of the MAV WorkCare scheme.

Income, rates and liabilities

The annual report revealed where council gets most of its income and it also revealed a large sum of liabilities.

The majority of council's revenue came from rates, with 60 per cent of the $116.5m in revenue coming from ratepayers.

Council received just over $70m in rates and charges compared to $67m last year.

Income from fines and fees also increased to $3m this year.

Infringements and costs were the highest type of fine generated, bringing in $327,000, compared to $159,000 worth last year.

Permit fees also bought in almost $2m for council.

The annual report revealed council currently has $75.3m in liabilities, mostly due to amounts owed to suppliers, provisions for landfill rehabilitation and amounts owed to employees for leave entitlements.

Council also borrowed more than they paid back this year, borrowing an additional $13.6m and only repaying $11.8m, leaving them $1.7m in the red for loans.

The liquidity ratio is a score which indicates council’s ability to pay their liabilities. A score of 1, indicates an ability to pay immediate debts but a score of 1.5 or higher is generally recommended. Council scored a 1.49, which still leaves them at the very edge of the “low-risk” category.

Community satisfaction and decision making

Only just over 50 per cent of people are happy with Bass Coast Council, the annual report reveals.

Council scored 53/100 for community satisfaction, compared to 57/100 last year.

Despite a downward trend in community satisfaction with councils across the state, Councillor Rochelle Halstead this is still an indicator council should be worried about.

“Council should take this seriously” she said.

Satisfaction with roads declined by one point also, from 55 to 54.

The satisfaction levels fell despite council improving the speed at which it dealth with issues.

Time taken to decide planning applications fell from 110 days to 108 days and 74 per cent were decided within the required time frame.

Time taken to action food safety complaints fell from two days to one.

Disadvantage and equity in the area

Bass Coast remains one of the more disadvantaged areas in the state but lots of work has been done to try and support those affected, with the unemployment rate dropping in the region.

At the time of the last report the unemployment rate for Bass Coast was 6.10 per cent, this year it has fallen to 5.2 per cent.

However despite this Bass Coast still remains a “low socio economic area”, not being able to budge our measure since 2019.

Council did not meet their target for providing more social and affordable housing in the area this year.

However, they have reached some important milestones and paved the way when it came to gender equity.

In September 2021 Bass Coast Shire Council implemented new parental leave initiatives for its team members that were a series of firsts for the local government sector.

They removed the terms primary and secondary carers – meaning all new parents are entitled to the same parental leave.

They increased paid parental leave from 14 weeks to 16 weeks for both parents and superannuation contributions will continue to be made on the unpaid component of 12 months parental leave.

The report showed full time employees were almost equally split between males and females and in the higher end band positions there are more women employed in them than men.

Men still earn 15 per cent higher on average than women in council, largely due to women predominantly working part-time.

“All these help reduce the power imbalance in homes,” Councillor David Rooks said

One of the target by products of these changes is trying to bring the domestic violence rate down, something which has still not been able to be achieved, as highlighted by the report.

The report also highlighted how there is now equal prize money offered for female and male categories in all local competitions and events.

The report also highlighted Bass Coast had the fastest rising regional population in Victoria.

The Bass Coast population of more than 40,000 grew at almost 9 per cent – the fourth fastest growing municipality per capita in Australia – with forecast growth of 26 per cent by 2033.

Waste management

More rubbish was thrown away this year but Bass Coast Council continued to lead the way in recycling and diverting it from landfill.

Bass Coast was nearly 10 per cent higher than the next local government area in the state this year when it came to this area.

“Our approach to bin size, colour and collection schedule has encouraged behaviours to achieve this much needed outcome for our community and our environment. All these initiatives are driving change and making a difference,’’ said Mayor Whelan.

73 per cent of kerbside waste was diverted from landfill this year. This is a slight decrease from last year when 75% was diverted. The report said this was due to a small increase in how much waste was collected.