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Huge increase the only merger protection for Wakool

Wakool Shire Council will need to increase its rate revenue to escape amalgamation.

TYLA HARRINGTON January 29, 2014 4:48am

Wakool Shire Council would need to increase its rate revenue by $1 million to escape amalgamation, according to an Independent Local Government Review Panel case study.

While its merger potential is rated by the panel as only medium – opposed to Deniliquin, Conargo and Murray’s high rating – the report indicates it is not able to remain viable on its own in the long-term.

The case study has described Wakool to be in a ‘‘weak’’ financial position, but able to maintain service levels in the ‘‘short to medium-term’’.

When commenting on Wakool Shire’s financial position, general manager Bruce Graham admitted ‘‘it’s always a struggle for small shires’’.

Mr Graham, however, said he believes it will be ‘‘sustainable in the future’’.

The report says it seems ‘‘reasonable to assume’’ that Wakool can adequately maintain service levels in the short to medium-term.

‘‘There is no reason to doubt that Wakool faces greater challenges than most to maintain and renew its infrastructure in order to provide reasonable service levels on a financially sustainable basis,’’ it says.

In order to maintain service levels in the longer-term, however, the report says Wakool ‘‘will need to increase its operating revenue base relative to operating expenses by about $1m to $1.5m per annum in real terms’’.

The case study suggested an increase in Wakool Shire rates could help to improve its financial status.

‘‘A 20 per cent increase in rates would generate the order of an additional $700,000 per annum. Any increase that was applied could of course be phased in incrementally,’’ it says.

‘‘Could such an increase be borne? Average rates per residential property in Wakool in 2012/13 were $475 compared with the state average of $837.

‘‘It needs to be borne in mind though that average household incomes in Wakool ($32,444, ABS in 2010) are well below the state average of $48,139 and the state average excluding greater Sydney ($40,242).’’

Wakool Shire serves an area of 7500km2 and has a population of 4400.

According to the report it seems ‘‘potentially possible’’ for Wakool to operate in an ongoing financially sustainable way in future if:

It generally maintains but does not substantially increase service levels. (This may include upgrading some sections of its transport network and accepting a lower level of service from other parts).

It is able to generate in aggregate a combination of: efficiency savings, increased rate revenue and additional ongoing grants sufficient to ensure it can progressively reduce and eliminate the gap between underlying operating revenue and operating expenses.

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