Coffs Harbour Council claims budget surplus. How did it occur?

By Cob

It was reported on Saturday 28 April that  the council meeting on 26 April saw the Coffs Harbour City Council (CHCC) table a budget to show a surplus of $3.86million for the 2017-18 year. 

But do not jump up and cheer just yet.  There are some questions to be asked and it is best to start with the quote from the General Manager Mr Steve McGrath.

“The projected $3.86 on General Fund surplus in 2018/19 is evidence of success of the    business transformation that council has undergone in the past few years”.

Now hold on a moment, what year are we talking about?  Could it be mere coincidence there will a surplus of $3.86 million in both years?

But let us ignore this “fact” and look at some other matters.

Should the figure refer to 2017 /18 then it is;

  • a 2.5% variation from the estimates and,
  • either revenue has been exceeded or over calculated, or
  • A shortfall in the planned expenditure exists.

On the other hand should it be for 2018/19 then it is hard to say it is evidence of success.  The 2018/19 financial year is yet to start.

But we should overlook this “little mistake of fact”.  It is better to look at the message the General Manager is pushing.  He is unashamedly claiming success of the CHCC ‘transformation project’, aka ‘the CHCC restructure’.  But is this the truth?

At best it is questionable. There are some other facts he seems to have overlooked.  Facts local residents are well aware of and voiced their views on when it happened.

Not so long back most landowners received notice that the NSW Valuer General had reassessed in our area the worth of the land in its unimproved state.  This value then forms the basis from which the rates are calculated by Council. To Council any increase is a bonus; the rates automatically rise. This is unrelated to the ‘transformation project’.

So some 30,000 land owners received a new valuation.  In place like Sawtell this was a massive increase, in some cases up to $100,000.  Many “locals” were angry this meant they were to incur between $1000 and $2000 in annual rate increases.  Remember that General Manager.

Let us look a little broader than Sawtell.  With 30,000 land owners having an increase in their rateable land value their rates rose too.  A conservative figure of $100 per annum is used here merely for ease of calculation.  Guess what, General Manager that is $3 million without even trying.  It did not take to account the non-residential land for example.  And the figure of $100 is a long way short of what those in Sawtell were to pay.

So to get a surplus of $3.86M the average rate had to rise by $136 per annum.  And there are many out there who know they are paying more than this figure.

Now ask yourself; ‘do you believe the surplus arose because of the ‘dedicated’ work of council’?  Or was it a bonus caused by the revaluation less than 2 years ago?  After all 2017/18 would have been the first year to apply the new figures to the calculation of rates.

So as “evidence of success of the business transformation that council has undergone” it potentially falls short of the truth.  Do not claim credit for things that are just a windfall.  Council did not plan it, it was the result of something routinely done by the NSW Valuer General.

But it does raise another issue.  Council omitted any reference to the routine valuations from its working papers and left it out of their calculations.  This means their ten year rate increase proposal may have been flawed when it was sent off to the Independent Pricing and Rates Tribunal (IPART).

A little bit of truth would go a long way Mr General Manager. Or is this too much to ask?


Note: In a previous life before he/she moved to the Coffs Coast to retire ‘Cob’ worked as a specialist financial auditor for the Federal and NSW State Governments.


3 thoughts on “Coffs Harbour Council claims budget surplus. How did it occur?

  1. Spot on Cob – you have hit the nail on the head. That is exactly what gave the CHCC the surplus. Increased rates from higher land values.

    That and very little else.

  2. You are being extremely polite in suggesting the GM might be mistake in his statements. We were all mislead when the last round of rate rises were sent to IPart. Now we have either been mislead again or we have a person leading council who has no idea where revenue is sourced and what drives that source. I’m not a betting guy, but I’d place a dollar on the former. Further, I’d guess most residents would’ be fooled like our mayor.

  3. Yes Rikki and Chris I agree – I bet if land values were to head south, heaven forbid, that the GM would be quick off the mark to IPART asking for a rate variation.

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