Wollongong on cash-strapped councils list

Major Sydney councils including Mosman, Liverpool and Hornsby deny that they are at risk of defaulting on their financial obligations despite being placed on a list of councils with ”unsatisfactory” levels of accessible funds.A Department of Local Government report into the performance of councils has named 15, including 10 in urban areas, as having insufficient funds readily available to pay for the goods and services they use.To reach this finding, the report assessed the ”level of liquidity and the ability to satisfy obligations as they fall due” at each council. It presented its findings as a ratio of the amount of money available to meet liabilities (called the unrestricted current ratio) and said any ratio less than 1.5:1 was ”unsatisfactory”.Among those ranked unsatisfactory is Mosman with a ratio of 1.4:1, Liverpool with 1.29:1 and Hornsby’s at 1.19: 1. Griffith was the worst ranked council in the state with a ratio of just 0.57:1.Hornsby’s mayor, Nick Berman, insisted there was ”no chance we are unable to meet our short-term commitments” despite the council’s failure to win approval to increase rates above the government imposed cap.Cr Berman agreed it would have to cut services but declined to identify where they might be. ”We are having a close look at our core business and what things we should be cutting out.”While he would not say what services he believes are ”core services” there was ”no chance” libraries would be cut.Hornsby’s 50-year-old pool was badly in need of replacement but the council did not have the money to do so without increasing its debt levels, which he said were low and there were no plans to increase them.The finance manager at Mosman Council, Mark McDonald, said: ”There are no concerns about Mosman meeting its debts” despite its ”unsatisfactory” rating.His council had been doing a lot of infrastructure work, including expensive repairs to sea walls and had gone into ”a bit of debt”.The council had a 10-year financial plan that would improve the ratio, which Mr McDonald expected to be 1.8:1 at the end of that period. The plan to increase the amount of money at hand to meet expenses did not involved cuts to services, he said.Liverpool Council’s acting general manager, Farooq Portelli, disputed the minimum 1.5:1 ratio advocated by the Department of Local Government and said the ”accepted benchmark for the industry” was 1:1. ”Council’s independent auditor also continues to confirm that council remains in a sound and stable financial position,” he said.He said the fire that destroyed the council chambers would have no impact on the financial position as ”any recovery costs will be met by insurance”.The group manager for business at Griffith Council, Max Turner, agreed ”that ratio is not ideal and we’d be looking to improve”, but denied there was any risk of not paying debts. The council cut capital expenditure programs from $15-$16 million to ”below $10 million” and had ”tinkered” with some services but not to the extent that it had received any complaints. He said the ratio was misleading and did not take into account that a rural workforce like his accrued large amounts of leave which distorted the ratio used in the report. ACCOUNTS DUECouncils with least access to sufficient cash reserves:1. Griffith2. Port Macquarie3. Hastings4. Wollongong5. Cobar6. Wingecarribee7. Canada Bay8. Penrith9. Hornsby10. Liverpool
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