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Public Notice – Financial Facts

Charters Towers Regional Council in 2015

In response to concerns raised in the Charters Towers community about the finances of the Council, the following is offered to highlight the facts and impacts of decisions previously made, and some of the tough decisions that are to be made to ensure the long term financial sustainability of the Regional Council.

The Financial Facts relevant to Charters Towers Regional Council are:

  • The opening cash position for the amalgamated Regional Council on 15 March 2008 was $25.9 million

    • $15.7 million from Charters Towers City Council; and

    • $10.2 million inflow from the Dalrymple Shire Council.

  • The newly formed Charters Towers Regional Council  continued to run separate finance ledgers until the end of the 2008 financial year and the closing cash position for the Regional Council at 30 June 2008 was $20.4 million

    • $14.8 million from Charters Towers City Council ledger; and

    • $5.6 million from former Dalrymple Shire Council ledger.

  • In the last Audited Financial Statements for the Regional Council, 30 June 2014 cash reserves were $35.5 million.

Council’s reserves remain strong. However, due to a reduction in subsidies and nil Road Performance Contracts, which over the past six years have averaged at $8 million per year, Council forecasts that income will be short this year by $6.7 million

Council will have to drawdown from its ‘Sustainability Reserve’ of $4.8 million and also draw down a portion of the ‘Projects Reserve’ to meet this shortfall. Drawing on reserves does not provide for a sustainable future.

The preventative financial steps being taken to reduce annual expenditure to match annual income is based on advice from both the Federal and State governments, that reduced subsidy and nil creation of contracts to bid on, is here to stay for the foreseeable future.

Another significant challenge is the annual Employee Costs. 

  • In the financial year 2006/2007, prior to amalgamation, combined Employee Costs paid between both former Councils was $11.7 million annually. 

  • Annual Employee Costs in 2013/2014 were $20.7 million with 2014/2015 year’s Employee Costs Bill forecast to be $21.6 million.  This is a $9.9 million increase in 8 years and is a direct result of an unbudgeted commitment in 2008, to offer the ‘best of the best’ between both Enterprise Agreements. 

  • In 2008/2009, annual Employee Costs rose to $16.2 million (audited figure) and have continued to rise, based on the ‘Best of the Best Enterprise Agreement’. 

  • With the current Enterprise Agreement ending in March 2015, these unsustainable increases are now being addressed by the current Enterprise Agreement negotiation in place, together with the steps necessary to ‘right-size’ the number of employees back to that which was pre amalgamation being combined 234 in March 2008.  Employee numbers rose to 282 by June 2009 and are now currently back to 260. 

  • Amalgamation was intended to reduce regional employee numbers, apart from employees delivering new and increased service levels.  Employee numbers have been progressively being addressed, and final right sizing of numbers is continuing.

Other reviews are being undertaken by staff within the Council to look for and identify efficiencies. All 75 services provided by Council to the community and internally are being reviewed as is the plant fleet. Between the amalgamation in 2008 and September 2012 an analysis of plant movements revealed that 178 items of plant had been acquired and only 73 items of plant disposed of over the same period.

All plant items are being reviewed and plant identified as surplus to requirements is being disposed of and removed from the balance sheet.

Charters Towers Regional Council’s reserves will still remain strong, going into the next financial year, followed by early July 2015, when the 2015/2016 budget will be handed down, providing the projected financial position come June 2016.

Strong long-term financial management will continue, allowing the necessary decisions to be made ahead of negative financial impacts, ensuring that community services and finances, managed by Council, will remain sustainable.

MG 9 March 2015


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