While state and federal governments battle large budget deficits, South Australia’s local government sector is almost “back in the black”.
The decade-long financial performance of SA councils’ has wiped out deficits and stabilised, an analysis of audited accounts shows.
Figures for 2013-14 show a total operating deficit across all 68 councils of just $1 million, or 80 cents per South Australian.
LGA president and Prospect mayor David O’Loughlin said this was a huge improvement compared to the aggregate operating deficit of $75 million in 2000-01.
“Given current budgets, in total, are more than $2 billion and we look after about $21 billion in community assets, a $1 million deficit is very close to a balanced budget and therefore a great outcome,” he said.
O’Loughlin said that while the performance of individual councils varied, the year ended with 41 councils in the black compared with only 16 councils recording a surplus in 2000-01.
“The other key indicator we look for is the net financial liabilities ratio, being the most comprehensive measure of councils’ indebtedness expressed as a percentage of operating revenue,” he said.
In aggregate, councils net financial liabilities ratio was 28 per cent in 2012-13 compared with 36 per cent in 2000-01 and with the State Government’s NFL ratio of 113 per cent.
“The state has different drivers but for SA’s 68 councils a total net financial liabilities figure of $536 million against $21 billion worth of infrastructure and other assets to look after is on par with someone having a $10,000 mortgage on $400,000 house – more than manageable,” O’Loughlin said.
The financial discipline, however, is unlikely to lead to a reduction in council rates or major infrastructure spend.
O’Loughlin said that the biggest challenge for councils was ensuring that the current generation paid its way and did not leave a legacy of worn out assets for the next generation to fix.
“That involves some tough budget decisions every year and saying ‘no’ to many things the community would like,” he said.
“Council budgets remained under enormous pressure impacted most by infrastructure challenges, rising community demands and falling federal grant income, cutting $24m from the sector this year alone.”
