‘Back To Basics’ To Address Cumberland Council Finances

Written by on 7 August 2020

Cumberland City Council is addressing its financial future citing pandemic concerns and issues with the NSW government’s amalgamation process, now under investigation as evidence mounts regarding the Premier’s involvement.

Going back to basics, the Council is addressing its current financial situation, with Council General Manager, Hamish McNulty outlining several actions needed to ensure the long-term financial viability of the City in their 2020 economic statement.

“The financial pressures experienced by Cumberland City Council are well-known” according to McNulty, who said the City is now considering measures to achieve $4.5 million in savings and reduce the cost of services by 10%”.

“Our focus is on a ‘back to basics’ approach to ensure that our available resources are spent on Council services that are important to the community, including essential services, critical works and infrastructure. We also need to ensure that those services are delivered in the most cost-effective way possible.”

The financial statement focuses on the impact of two key factors, namely the amalgamation process that created the Council and the financial crisis created by the COVID-19 pandemic.

According to the statement, Cumberland City finances had already been in decline well before the pandemic, with the proclamation of the Council resulting in a $41 million drop in unrestricted cash over the last three years. An amount that now sits at a balance of negative $3 million.

“Since November 2019, Council has responded swiftly to its financial situation. The COVID-19 pandemic has seen a further reduction of
$11 million in income over a three-month period.”

While the initial justification for compulsory council amalgamation provided by the State Government was that it would deliver $43 million in benefits to the community, instead 13,000 residents were removed from Cumberland City’s boundaries, with 41,000 residents added from Woodville Ward of Parramatta City Council.

“Council inherited a difficult challenge in servicing these areas with a severely reduced level of rates income to support this service delivery.”

First set up in 2016 by then Premier Mike Baird, the fund was designed to financially support amalgamated councils.

Despite KPMG financial analysis for Cumberland Council declaring salary and contract savings, actual costs increased by 9.6%, effectively increasing the cost of operations by $20 million in the space of one financial year.

“In summary, the amalgamation process has resulted in the new Council struggling to remain financially viable, without substantially increasing rates and achieving substantial cost efficiency to fund the services required to be delivered.”

Gladys Berejiklian

It comes following mounting evidence alleging the NSW government tried to hide Premier Gladys Berejiklian’s personal involvement in a council grants scheme now alleged to be the subject of rorting.

Documents seen by the Herald revealed the Premier signed off on a $1 million grant to Hunters Hill Council under the Stronger Communities Fund, but that answer was struck out and amended.

Released to Greens MLC David Shoebridge, the correspondence confirms “the government deliberately hid the Premier’s role in this $250 million local government grants scandal,” Mr Shoebridge said.

“The government knew that what they had done was wrong and that’s why they kept hiding the Premier’s involvement.”

NSW Auditor-General Margaret Crawford has confirmed she is investigating the government’s handling of the fund, which saw Gladys approve $90 million awarded to Hornsby Shire Council, which had not been merged.

$12 million was also approved for Burwood, Canada Bay, Ryde, Waverley and Randwick councils, none of which had been amalgamated and were all areas held by Liberal MPs.

Despite the allegations, the NSW government maintains that all funding allocations followed established guidelines, citing the “significant benefits” delivered to local communities across the state.

“As the Greens’ analysis has clearly shown, this was Coalition pork-barrelling of the first order and there is now less and less room for the government to hide from real accountability,” said Mr Shoebridge.

An inquiry is now looking into the allegations of grant rorting, with submissions closing on August 23.

An analysis of the Stronger Communities Fund grants revealed that 80% of the allotted $250 million had been given to Coalition-held seats since 2017. Matching similar funding handouts in the $40 million sports grants program, which saw Liberal electorates receiving 17 of the 22 grants.

While the North Sydney Olympic Pool receives a grant of $5 million, Cumberland is undertaking a market testing activity on the operations of swim centres, indicating Wentworthville Memorial Swim Centre could be sold to a private operator.

The facility is currently nearing completion of its $8.9 million refurbishment.

The Cumberland Council is now forecasting available cash amounts of negative $6 million, as a result of the pandemic, council amalgamations and the reduction in the Federal Assistance Grant (- $1 million) and a declining interest income of (- $2 million) per annum.

Economic Statement from Cumberland City Council | Cumberland City Council

Cumberland City Council has released an economic statement outlining a number of actions to address its financial situation. Swim centres, education and care services, senior’s living units and other assets like the Holroyd Centre and Auburn Golf Course are among the areas being explored as Council…

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